Cyprus will cancel the preferential VAT rate for the purchase of residential property

19% is the standard VAT rate when buying property in Cyprus. In 2008, it became possible to apply for a reduced VAT rate of 5%.It is used for the first 200 sq m when buying the first property in the country.

In the near future, the Cypriot government will revise the rules for applying a preferential VAT rate of 5% when buying a primary property. The new rules will have to comply with EU law.

VAT now:

Currently, there is a preferential VAT rate of 5% instead of the standard 19% for new buildings. The reduced rate applies to residential properties not exceeding 200 m2 and exclusively for personal use.

If the housing area exceeds 200 m2, then the difference is subject to 19%.

Assumptions of the new preferential VAT rate:

A reduced rate of 5% applies to the first 90 m2 for apartments and 170 m2 for private houses, provided that the cost of the apartment does not exceed 200,000 euros, and the house - 350,000.

Any residential property, whether it is an apartment or a house, exceeding the area and value limit, is subject to the full VAT rate of 19% for the entire area