Accounting & tax for restaurants & hospitality in Cyprus
Restaurants, cafés, bars and hotels in Cyprus run on thin margins, high transaction volumes and a workforce that swells and shrinks with the season, which makes the accounting unforgiving of error. A defining feature is the reduced 9% VAT rate that applies to restaurant, catering and accommodation services, sitting beside the 19% standard rate that still applies to many other supplies such as the sale of alcohol in certain cases or packaged goods, so each till category has to be mapped to the right rate. Payroll is the other pressure point: seasonal teams mean constant starters and leavers, each registered before they begin work, with employer Social Insurance, GHS and the other levies remitted monthly. Tips, service charges and cash takings need correct VAT and payroll treatment, and food and labour cost percentages have to be watched weekly because a few points of slippage wipes out the margin. Companies still pay 15% corporate tax and must be audited or reviewed. We keep the VAT right, run the high-volume payroll and give you the numbers that protect cash flow.
What we take off your plate
9% reduced VAT vs 19% standard
Restaurant, catering and accommodation services generally fall under the reduced 9% rate, but not everything a hospitality business sells does. We map each till and menu category to the correct rate so your returns are right and you are protected on the VAT inspections this sector regularly attracts.
Seasonal payroll & high turnover
Summer brings a surge of staff and a stream of starters and leavers, each of whom must be registered before their first shift. We run the full monthly payroll cycle, including Social Insurance, GHS and the other employer levies, so registrations and contributions are never late.
Tips, service charges & cash
Tips, service charges and cash takings each have specific VAT and payroll consequences depending on how they are pooled and distributed. We treat them correctly so they are neither over-taxed nor a hidden compliance gap, and so cash reconciles to the till and the bank.
Food & labour cost control
In a low-margin, high-volume business, food and labour costs as a percentage of sales are the metrics that decide whether you make money. We deliver weekly or monthly figures on these, plus covers and average spend, so you can act before a bad month becomes a bad quarter.
Stock, wastage & supplier reconciliation
Perishable stock, wastage and a long list of suppliers make purchasing easy to lose control of. We reconcile supplier statements, track stock movements and tie purchases to sales so margin leakage and supplier errors surface quickly rather than at year-end.
Corporate tax, audit & annual filings
A hospitality company pays 15% corporate tax and must file annual returns and have its accounts audited, or ISRE 2400 reviewed if turnover is under €300,000 and assets under €500,000 for two consecutive years. We keep records clean year-round and coordinate the ICPAC-licensed engagement.
The services that fit
Payroll & Social Insurance
Fully managed Cyprus payroll: PAYE, Social Insurance, GHS, payslips and Emoluments returns, every month.
Learn moreVAT Services
Cyprus VAT registration, returns, VIES and OSS — handled accurately and on time so you avoid penalties.
Learn moreAccounting & Bookkeeping
Accurate, ICPAC-aligned bookkeeping and management accounts that keep your Cyprus company compliant and decision-ready.
Learn moreFrequently asked questions
Restaurant and catering services, and accommodation, generally fall under the reduced 9% VAT rate rather than the 19% standard rate. However, not every supply a venue makes qualifies for 9%, so each menu and till category should be classified individually. Correct categorisation is a frequent VAT audit point in this sector.
Every employee must be registered before they start work, with monthly Social Insurance, GHS and PAYE remitted by the end of the following month. Employers contribute Social Insurance 8.8%, Redundancy 1.2%, HRDA 0.5%, Social Cohesion 2.0% and GHS 2.9%; employees pay Social Insurance 8.8% and GHS 2.65%. We run the full cycle including starters and leavers.
The treatment depends on whether amounts are a discretionary tip kept by staff, a service charge that forms part of the business's takings, or a pooled arrangement. These affect both VAT and payroll, so they must be documented and processed consistently. We set up the right treatment so nothing is missed or wrongly taxed.
At minimum monthly, and ideally weekly, figures on food cost and labour cost as percentages of sales, plus covers, average spend and cash position. These are the metrics that protect margin in a high-volume, low-margin business and let you correct a drift in costs before it compounds.
Every Cyprus company must have its financial statements audited or reviewed. A full audit applies unless the company qualifies for the lighter ISRE 2400 review, available where turnover is below €300,000 and total assets below €500,000 across two consecutive years. Both are performed by ICPAC-licensed practitioners.
Compulsorily once taxable turnover exceeds €15,600 in any rolling 12-month period, which most established venues pass quickly. Once registered, you charge the appropriate rate, 9% on qualifying restaurant and accommodation services and 19% on standard-rated supplies, and file periodic VAT returns.
Useful tools & guides
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