5% VAT on primary residence
We would like to inform you that on 16 June 2023, an amendment to the Cyprus VAT Law was published in the Cyprus Government Gazette concerning the new legislative framework for 5% Value Added Tax (VAT) rate on the acquisition and/or construction of a primary residence in Cyprus.
The new law provides that 5% VAT applies for:
The first 130 sq.m. for a value up to €350.000
Subject to the total value not exceeding €475.000 and total size not exceeding 190 sq.m.
The acquisition and/or construction of a new residence which exceeds the 190 sq.m. and/or €475.000 maximums will be subject to 19% VAT for the whole value.
The new legislative framework does not apply for buildings for which a planning permission has been obtained or an application for planning permission has been submitted until 31st of October 2023, and the relevant application for the 5% VAT rate has been submitted within 3 years from the date of the new law (i.e. by 15/06/2026)
Any residences meeting the transitional provisions will be eligible to apply for the 5% VAT reduced rate under the regime applicable up to 15/06/2023 (i.e. 5% for the first 200 sq.m. with no value or size maximums).