Yes, we’ve covered this topic in the past, and have even used the same title, twice. But… although the title is too good to change, this seminar will be a little different.

The Chelco VAT International Academy continues its series of high-level VAT educational events this time with a morning seminar focussing on specific aspects concerning the application and complexities of the Right to Deduct VAT.

In this ‘deductions’ seminar, we will shed much more light on how we should treat the input VAT split between economic and non-economic activities. This is always an area of dispute when being examined. We need to understand some ground rules before applying a formula to determine this ‘pre-pro rata’ split. 

We will also be looking at the economic pro-rata split (i.e. input VAT that should be allocated between exempt and taxable transactions) and examine the turnover-based allocation method which is in the law, discussing also alternative formulas. 

The Right to Deduct VAT is the single most important aspect of the VAT legislation. The deduction system is meant to relieve traders entirely of the burden of the VAT payable or paid in the course of all their taxable economic activities. 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. However, 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 taxable person. Having a solid understanding of the deduction system is therefore paramount.

The seminar will cover the following:

• An explanation of the main provisions in the Cyprus VAT legislation and EU VAT Directive regarding the right of deduction
• Understanding the underlying philosophy of apportioning input VAT for non-economic activities, and examining which method is appropriate
• Understanding the available methods for the pro-rata apportionment (exempt and non-business activities)
• In all aspects of the seminar, where possible, we will analyse decisions of the European Court of Justice that emphasise the points made
• As always, several examples will be presented and solved

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