Temporary VAT Reduction for Hospitality and Transport Industries

Temporary VAT Reduction for Hospitality and Transport Industries

As part of the relief package to support the economy and workforces affected by the Coronavirus pandemic, especially in tourism sector, the Cyprus Government has temporarily reduced the VAT rate that applies to the tourism, restaurant and transport industries from 9% to 5%.

As per the Decree Κ.Δ.Π. 268 / 2020 published on 23 June 2020, the VAT rate for accommodation, restaurant/catering and passenger transport services will be reduced from 9% to 5% for the period from 1 July 2020 to 10 January 2021.

The rate reduction applies to the following:

  • Hotel, tourist and other similar accommodation;
  • Restaurant and catering services;
  • Transport of passengers and their accompanying luggage within the Republic with a taxi or a bus.


Businesses affected by the above need to take action to ensure the change in VAT rate is correctly reflected in their accounting systems to avoid problems in future VAT audits.

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As always, M. Target specialists remain at your disposal should you require any further information or clarification regarding the potential impact of the above Decree to your business.

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