VAT

Cyprus is to extend the transitional period on the 5% reduced VAT rate for primary residences (first homes) until the end of the year. The transitional period was supposed to end at the end of June 2026.

The amendment gives applicants four years instead of three from the 2023 VAT law change to submit the declaration needed to secure the reduced VAT rate.

Slow permit processing has threatened to exclude eligible buyers from the 5% Reduced VAT scheme on primary residences. The extension aims to protect buyers affected by long delays in planning and building permit approvals.

Transitional vs. New VAT Rules
• Transitional rule: 5% VAT on the first 200 sq m for applicants who filed between early June and 31 October 2023.
• New system: 5% VAT only on the first 130 sq m (up to €350,000), with 19% VAT applying to homes 131–190 sq m (up to €475,000).

The extension is expected to ease pressure on buyers and developers navigating administrative delays who had a planning permit application submitted between early June and 31 October 2023, and gives access to the reduced 5% VAT rate for eligible buyers on eligible properties.

For further information, please contact us via email at info@zambartaslegal.com or via telephone at +357 22262108.