Paphos Life

My landlord is undertaking a major project on our house (at our request) and we have agreed to pay him for half the cost of the work. Now I assume VAT will be charged, and - as he is a legitimate businessman - he will be able to claim the VAT back as a business expense. At least that is what would happen in the UK.

Does this happen in Cyprus? The shop where he is buying the kit charges VAT, of that I am sure as I have seen the estimate for the work. I don’t want to pay half the VAT if he is able to claim it back. Any experts able to offer some advice?

Can o' worms MacManiac!!

Presumably he is registered for VAT so should legally be able to offset the full invoice VAT against his VAT income. So one might think, fine, I'll just pay the vat free total and he can reclaim the full VAT on his VAT return. But as a supplier I would guess (no experience with Cypriot accounts so going on UK rules) he should charge relevant VAT on his invoice to you which means you would have to pay that VAT!

I know in the UK HMRC would be all over this like a rash, but being a humble accountant and not an auditor I don't know the ins and outs and certainly no idea of Cypriot Accountancy.

I'm sure as a Cypriot he has ways and means of circumventing the Accountancy rules here, so give it a try, he may be happy to play ball and his Cypriot accountant may be happy to go along with it!

Welcome any Cypriot accountants view on this!!

Easy explanation. MrCyprus charges you 120euros - 100euros + 20% VAT
He pays his suppliers 60 euros plus VAT for materials = 72 euros

He pays Revenue 20euros, less 12 euros = 8euros on the transaction. He has made 120-72-8=40euros

If he charged you only 100euros - he would have made 92euros, less 60 euros = 32euros

So he has lost 8 euros and you have gained 20

VAT is payable by the end-user, ie you in this case.
However, as HIC suggests, you may be able to call on your landlord's better nature and come to an agreement with him over the VAT.
As the saying goes, nothing ventured, nothing gained.

Thanks for the replies and advice. My landlord is registered for VAT, and does declare the rental income for all his properties. We asked him to do the work, and offered to pay him half the cost. As he is improving his property, and will gain a long-term benefit from that when we go to meet our maker, I had hoped and assumed that he would pay the invoice, and I would then pay him our share. He would then claim that VAT back as a legitimate expense. Time will tell ...