In accordance with the Cypriot Value Added Tax – Country Tax Guides issued by the Commissioner of Taxation, the supply, modification, repair, maintenance, chartering and hiring of aircrafts used by airlines travelling on international routes are zero rated. Military aircrafts, on the other hand, do not qualify for the zero rate.

The following services relating to aircrafts are zero rated:

• The supply of goods to foreign aircrafts (fuel, spare parts, equipment, provisions) on a flight which is to be made for a non-private purpose and travels outside the Republic;

• The supply of services to meet the direct needs of passengers on commercial or military aircrafts (such as pilotage);

• The supply of services to meet the direct needs of cargo within an airport.

However, services including those of customs agents, aircraft or cargo inspections, the services supplied to private aircrafts and the loading or unloading at the trader’s premises are subject to the standard rate.

A circular issued 26 July 2019 by the Tax Department specifies the following regarding the services provided to meet immediate needs of an aircraft at an airport in Cyprus:

For the zero rate to apply for these services, the aircraft must be used mainly for international transport for a fare and for the place of provision of such services to be in Cyprus. These services must also be specifically stated in the legal agreement between the airport and aircraft handling companies.

It is important to note that these services are deemed to be provided at the place where the recipient of the services resides. This is in cases when a taxable person resident in the Republic provides services to a non-Cyprus resident.