On 16 June a VAT Amendment Law was published in the official gazette of the Republic of Cyprus, which introduces changes to the conditions for the application of the reduced VAT rate of 5% for the acquisition or construction of a residence.
The amending law states that the 5% VAT rate will apply only to the first 130 square meters of the buildable area and up to a total cost of 350,000 euros, provided that the total amount of transaction does not exceed 475.000 euros and the total area does not exceed 190 square meters. Residences exceeding these limits are subject to 19% VAT on the total cost.
As a part of transitional provisions, the amendment does not apply to residential buildings for which planning permission has been obtained from the competent authority or an application for planning permission has been submitted to the competent authority by 31 October 2023 and the application form of the reduced VAT rate is duly submitted to the tax authorities within three years of the date of entry into force of this amending law.
Originally published July 3, 2023.
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