VAT on property in Cyprus
VAT (Value-Added Tax) is a general consumption tax on goods and services, charged as a percentage of the price. Under the Cyprus VAT law, a transfer of immovable property counts as a supply of goods.
VAT on property in Cyprus applies to new buildings, with their land, sold before their first use, and to undeveloped building land meant for one or more fixed structures and sold as part of a business. Other sales of property are exempt. The standard rate is 19%.
Legislation
The Value Added Tax Law of 2000, Law 95(I)/2000, as amended.
Do you pay VAT on a resale property in Cyprus?
No, once the building is past its first use. A sale after the first use of the building is exempt from VAT. First use means systematic use of the building, by the owner or a tenant, for at least 18 months after it was built or delivered. A home sold before then can carry VAT, even on a second sale.
A sale that carries no VAT normally pays transfer fees. A VAT sale normally pays none, but the Director of the Department of Lands and Surveys may charge the fee where he is not satisfied that the declared price is the market value at the date the sale was agreed. The fee is then worked out on the market value, less the fee that would have been due on the declared price.
Read more about other property taxes in Cyprus.
Cyprus reduced VAT rate
A buyer who will live in a new home as their main and permanent residence in Cyprus can apply for VAT at 5% instead of 19%. The 5% applies to the first 130 sq m of buildable area, up to a value of €350,000. VAT on the rest of the price is at the standard 19% rate. Two limits decide whether the 5% applies at all:
- the total value of the transaction does not exceed €475,000;
- the total buildable area of the home does not exceed 190 sq m.
If either limit is passed, the whole price is charged at 19%. Buildable area is the figure set by the building coefficient on the architectural plans filed for the planning permit, or for the building permit where no planning permit is needed. It is not the brochure area.
For a family with four or more children, the total area allowed rises by 15 sq m for each child after the third. The law counts unmarried children under 18 (children of a marriage, recognised children born outside marriage, legally adopted children and stepchildren) and unmarried children who live with the person claiming the 5% rate and are permanently unable to support themselves.
A person with a disability gets the 5% rate on the first 190 sq m of buildable area, whatever the total buildable area of the home.
Transitional rules for planning permits applied for by 31 October 2023
The limits above came in with Law 42(I)/2023 on 16 June 2023. A building whose planning permit was obtained or applied for by 31 October 2023 can stay under the old rule, 5% on the first 200 sq m of buildable area, if the declaration was filed within three years of the law taking effect, by 15 June 2026.
Law 109(I)/2026 (Official Gazette No. 5089, 24 April 2026) lets the Tax Commissioner examine these declarations until 31 December 2026 where delays by the planning authorities held up the examination. The Tax Department's announcement of 4 May 2026 applies it this way:
- Building permit issued after 1 January 2025, or not issued by 31 December 2026: the Tax Commissioner will accept the declaration and can examine it until 31 December 2026.
- Building permit issued by 31 December 2024: the declaration had to reach the Tax Commissioner by 15 June 2026, and that date has passed.
Declarations must be submitted through the Tax For All (TFA) system.
How to apply for the 5% rate
You file a declaration with the Tax Department through the Tax For All (TFA) portal and attach the documents below. You receive a certified copy of it and hand it to the seller or, for a home you build, to the contractor. The seller or contractor must then charge 5% on the part of the price that qualifies.
Required documents
These documents include:
- a signed declaration from the architect or civil engineer;
- a signed declaration from the contractor;
- the planning permit, or the building permit where no planning permit is needed, with its conditions (one permit for a whole development);
- the application for that permit, from the authority;
- a certificate of the buildable area from the authority;
- the contract of sale or, for a home you build, the construction contract;
- the contractor's annual licence for the construction period;
- proof of the purchase or construction, such as the down payment receipt or the loan application or approval;
- proof that you live in the home, such as electricity or water bills, filed within 12 months of taking possession;
- any other documents the Tax Department asks for to examine the claim.
Who qualifies for the 5% rate
- You are an individual, not a company, aged 18 or over on the date you apply.
- You are buying or building the home to live in as your main and permanent residence in Cyprus.
- The application for the planning permit, or for the building permit where no planning permit is needed, was filed after 1 May 2004.
- You file the declaration at any stage of construction or, for a purchase, before you take possession. The Tax Commissioner can accept it up to 12 months after you take possession if you give him full supporting evidence and he accepts the reason for the delay, for example absence from Cyprus or illness.
- You have no other home in Cyprus acquired at the reduced rate. The law allows a second claim within 10 years if you comply with the 10-year rule below for the first home. The Tax Department's guidance asks for the 10-year period on an earlier certificate to have passed, so check with the Tax Department first.
- A married applicant can claim the rate for one home only. The spouse must sign, at the same time, a declaration that they own no other home in Cyprus used as their main and permanent residence.
- If you received a grant under the Special Grant (Purchase or Construction of a Home) Law, you have repaid it as that law required.
- If you stop living in the home within 10 years, you must tell the Tax Commissioner within 30 days and pay the difference between the reduced and standard rates in force at the time of the sale or construction, for the part of the period you did not live there. This does not apply on the owner's death or on a transfer to an adult child who qualifies at the time of the transfer.
Cyprus reduced VAT rate on other aspects of real property
A reduced VAT rate of 5% applies to certain renovation services: plumbing and electrical work, carpentry, painting, and construction. At least 3 years must have passed since the home was first lived in or used. The 18-month first use period counts toward these 3 years.
The materials are included in the reduced VAT provided their value does not exceed 50% of the total cost of the service.