16 November 2022

As of 1 October 2011, a reduced VAT rate of 5% (against the standard 19% VAT rate) can be imposed on purchasing real estate property in Cyprus. This relates only to the NEW property, built by developing companies.

Foreign purchasers are also eligible for the VAT reduction, provided the following conditions :

- The rate of 5% of VAT applies on the first 200 squares meters of the buildable area of the house / apartment. The property can be larger than 200 square meters but the rate of 5% can only be applied to the first 200 square meters.

- Acquisition of the property needs to be done for personal use as the applicant’s principal place of residence in Cyprus for 10 years (if the property is sold earlier, the difference in VAT should be paid back to the government in proportion of the years of possession).

- The applicant should be the first owner of the property. The secondary sale of real estate is not subject to VAT, only a fee for the transfer of ownership is paid for such property, provided that a separate title deed is issued. The exception is the resale of new real estate under, e.g. the assignment agreement. The criterion for the concept of "new" is the use of electricity (tax requests meter readings).

- The application for a planning permit (or a building permit where no planning permission is required) must be submitted to the competent authority after 01/05/2004.

- The application must be submitted before the applicants have moved in the property.

- The application can be submitted only after the applicant signed the Sale / Assignment Contract.

We assist our clients to apply for the reduced VAT at the real estate property purchase.