VAT on property in Cyprus
VAT (Value-Added Tax) is a general consumption tax that applies to the distribution of goods and the provision of services. It is charged as a percentage of the price. Land and real estate dealings belong to the supply of services, so they are also subject to VAT.
VAT on property in Cyprus is a tax imposed on the sale of new properties. The VAT rate is 19%.
Legislation
VAT law 95(I)/ 2000 as amended.
Do you pay VAT on a resale property in Cyprus?
No, such transactions are not subjected to VAT, but they are subject to transfer fees.
Cyprus reduced VAT rate
There is a reduced rate of 5% to the first 130 sq m of a primary residence, provided three criteria are met. These criteria are:
- the primary residence is up to EUR 350,000 in value;
- the total transaction does not exceed EUR 475,000 in value;
- the total constructed internal areas of the residence do not exceed 190 sq m.
Individuals with disabilities are allowed the reduced VAT on the first 190 sq m of property.
A reduced VAT rate applies to several other types of transactions, such as the delivery of food, gas, and medicine, the sale of works of art created by the artist, and entry to areas of public education and culture such as museums, concerts, and cinemas.
Applying to claim VAT on the property back
To be granted the reduced VAT rate for real estate, you must apply and send supporting documents to the Tax Department (Ministry of Finance).
Requirements to claim VAT back
- You must be over 18 years of age on the date of application.
- The property must be your principal and primary residence in the Republic.
- Application for planning or building permission for the property must have been submitted after 1 May 2004.
- You must apply before moving into the property.
- You must not own any other property you use as a residence; the property for which you claim the reduced VAT will be your primary and private residence.
- If you received a grant under the Special Grant (Purchasing or Building a Home) Law, you will be entitled to the reduced VAT only after 10 years have passed from receiving the grant unless you provide a receipt that you have repaid the grant in whole or in part.
Documentation
You will need to provide several supporting documents, including a copy of your ID card or passport (for foreign nationals), a copy of your marriage certificate (if applicable), a copy of your building permit, the contract of sale/ construction (as the case may be), and proof of purchase (like a down payment receipt, loan agreement, and so on).
Cyprus reduced VAT rate on other aspects of real property
A reduced VAT of 5% applies to certain renovation services: plumbing and electrical, carpenter, painting, and construction. The property must be considered “older”; at least three years have passed since moving into the property. The materials are included in the reduced VAT if their value is more than 50% of the value of the whole service.
