With an almost unanimous vote and oversight from Brussels, the parliament approved a law on Thursday that permits a lowered 5 percent VAT rate for initial home purchases.
The amendment to the Law of Value Added Tax of 2000 (95(I)/2000) was approved by the Cyprus Parliament. The revised legislation introduces a new tax (VAT) structure concerning the eligibility requirements on first property purchases in Cyprus.
According to the updated regulations the approved amendments are as follows:
- For a property of a total 130 m² covered area and valued up to €350K, the new legislation introduces a 5% VAT rate.
- For a property up to 190 m² covered area and valued up to €475K the new legislation introduces a 5% VAT rate just for the first 130 m², while for the remaining 60 m² , the VAT will increase to 19%.
- For a property with a covered area above 190 m² and value over €475K will be subject to a 19% VAT rate.
The new regulation does not apply if a planning permit has been obtained or if an application for a permit has been submitted within four months of the law’s implementation.
To ensure eligibility for a reduced VAT rate for purchasing or constructing a residence, it is crucial to obtain a planning permit and submit a completed responsible declaration to the Tax Commissioner within three years of the law’s enactment.