Recently, the Cyprus Parliament has passed the Value Added Tax (Amendment) Law of 2016, which provides the imposition of a reduced rate of VAT 5% on the first 200 square meters for the construction or purchase of a house and the imposition of a standard rate of VAT 19% on each additional square meter of the house.
Previously the legislation provided the imposition of a reduced rate of VAT 5% on the first 200 square meters of the total area of the house, only if the total area of the house was no greater than 275 square meters. However under the amended legislation the reduced rate of VAT 5% is applicable to all acquired houses, irrespective of their total area.
Pursuant to the amended legislation, the reduced rate of VAT 5% will be imposed under the condition that the house will be used as the primary residence of the person for the next 10 years.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
