The majority of disagreements with the Tax Department concern the right of a business to deduct VAT on goods and services purchased for the business. Not understanding how the deductions system works can lead to a far greater VAT cost for businesses. It is therefore imperative to firmly grasp when it is possible to deduct, and when not – to deduct or not to deduct: VAT is the question!

The Chelco VAT International Academy continues its series of high-level VAT educational events with a full-day seminar focussing on the application and complexities of the Right to Deduct Value Added Tax (VAT). We have kept the same title as in 2021 when we last presented this topic, but we have revamped the entire seminar to better focus on key areas of this important topic.

The Right to Deduct VAT is the single most important aspect of the VAT legislation. Where the right to deduct VAT is incorrectly denied, the entire VAT system collapses. The European Court of Justice (ECJ) has ruled time and time again that the right to deduct is a fundamental right of the taxable person and cannot be limited.

Yet, the increased complexities of the number and types of transactions that businesses undertake today can lead to errors in input VAT deductions, and disagreements with the VAT authorities, which can consequently become very costly for the business.

Having a solid understanding of the deduction system is therefore paramount. This seminar provides exactly this understanding.  

The seminar will cover the following matters:

• An explanation of the provisions in the Cyprus VAT legislation and EU VAT Directive regarding the right of deduction;
• Understanding when, and during which stages of the economic life of a business, the right to deduct arises;
• Understanding which expenses are deductible and which are not;
• Understanding the methods of apportionment including;
  • Understanding the pre pro-rata (non-economic activities)
  • Understanding the pro-rata (exempt and non-business activities)
• Understanding deductions for certain financial transactions including share-holding activity;
• In all aspects of the seminar, where possible, we will analyse decisions of the European Court of Justice that emphasise the points made;
• Several examples will be presented and solved.

The seminar is open to any professional with exposure to VAT matters such as accountants, chief accountants, CFOs, financial controllers, tax lawyers, tax advisors, et al.