Changes on the applicable VAT rate relating to primary residence in Cyprus were introduced in June 2023 with Law 42(I)\/2023 and in April 2024 with Law 55(I)\/2024.<\/p>\n
Specifically, Law 42(I)\/2023 amends the conditions for applying the reduced VAT rate of 5% to the acquisition or construction of new residences. The revised conditions are as below:<\/p>\n
In cases which the buildable area exceeds 190 square meters or the total value of the residence exceeds \u20ac475,000, the standard rate of 19% is applicable on the purchase price or construction value of the residence.<\/p>\n
In addition, individuals with disabilities are allowed a reduced rate of 5% on the first 190 square meters of a primary residence.<\/p>\n
Further to the above, for families with more than three children, the total area of \u200b\u200bthe residence is increased both in the case of construction and in the case of acquisition of a primary residence for each additional child beyond<\/u> three children by 15 square meters.<\/p>\n
An important amendment to the Law is that the individuals who ceased using the residence as their primary and permanent residence before the expiration of the ten-year period, can now re-apply for the 5% VAT for another property if they:<\/p>\n
Lastly, amending Law 55(I)\/2024 introduces an exemption to the deadline of submission of the application. The individual must apply for the reduced VAT rate at any time during the construction of the residence or before moving into the property in the case of purchase. With the amendment, it is now possible to apply for reduced VAT within twelve months of moving in, provided that the individual missed the previous deadline because of absence from the Republic, illness or other serious reasons with the presentation to the Commissioner of supporting documents.<\/p>\n