VAT is a stealth tax introduced in Cyprus in 1992 at 5 per cent and steadily increased to the current 20 per cent. There is a new tax, not properly named or explained but could be described as ‘Import VAT’.
I was sent a Christmas present from the UK and was not able to receive it until I paid the VAT charge. I paid €24.47 which was a calculation based on the value of the parcel that my friend had been requested to add when sending from the UK. The value stated was £80, equal to €94.23 and 20 per cent VAT was applied resulting in €20.97. This is actually 22.3 per cent but let’s assume the Customs, Tax and VAT departments know how to calculate percentages better than I.
I emailed Customs Headquarters at [email protected]toms.mof.gov.cy to ask why I was charged VAT. This was a gift for Christmas. The traditional pants, socks and a jumper bought in the UK which already included a charge for VAT in the UK. Why am I being charged for VAT in Cyprus when it was paid in the UK?
The response was a link to the tax website and a copy paste of the rules that applied:
Consignment of a value exceeding €45. What are the reliefs from duties and taxes for parcels imported by post? In case where the value of a consignment exceeds €45 but does not exceed €150 see “Medium value parcels”. In order for the exemption to be granted, the gifts must:
- be of an occasional character e.g. birthday, anniversary
- be sent by an individual in a third country (non-EU) to an individual in Cyprus without any form of payment
- be intended for personal or family use of the recipient and must not, by their nature or quantity, reflect any commercial intent.
The rules seem clear that I was eligible for a refund. I was directed to fill in a relevant form to receive the VAT refund. The form seems to be for use by importers to claim back taxes for business purposes. I stated on the form that both I and the sender are individuals, I am not an importer, and the parcel was a gift.
I sent it to customs, and they replied with, “you are not eligible for a refund”. I replied asking why since the information they provided stated that I was eligible.
Back and forth we went with five emails over six days. I asked if there was a procedure for appealing this decision and was given the taxisnet email address to write to: [email protected] which I did on January 24.
On February 9, received a phone call from the VAT office telling me that the initial information I got from the customs department was not correct and that I am not eligible for a refund.
They explained that if I had paid import tax as an importer then I would be eligible for a refund. I explained that I am not an importer so did not pay import tax and paid instead VAT.
They told me that VAT is charged on parcels with a value over €45. I asked them why, since VAT was already charged by the seller in the UK then why is this second VAT charge being applied. I also added that this was a gift and why would VAT be applied at all.
With some explanation this charge described as VAT is not that, it is in fact an ‘Import VAT’. I repeated that it was not an import and so why did it attract this ‘import VAT’. The caller got exasperated over my lack of comprehension, and I got vexed with him for not speaking logically, and around and around we went. “It is what it is” were his final words before he ended the call.
So what to do? If you are being sent gifts from outside the EU, make sure the sender states their value as less than €45.