Since 2004, when buying a new build property in Cyprus, there is a VAT charge. Currently, VAT rate is 19%.
Special regulations allow a lower VAT charge (5%). According to VAT Law, the reduced VAT rate of 5% is given to an eligible person (a person who is over 18 years old and he/she being a citizen of the Republic of Cyprus or a citizen of any other European member country, who is permanently residing in Cyprus*) for the construction or purchase of a new dwelling or apartment, used as the main and primary place of residence under certain criteria. The dwelling must be intended to be used or it must be used by the entitled person as his/her main place of residence.
Important note: 5% rate applies until 200 sq.m. area of a residence. Meaning, for example, that, if a residence bought for first time (in ten years) in order to be habituated and its area is 250 sq.m., 5% rate of VAT applies until 200 sq.m. and 19% rate applies to the rest 50 sq.m. of residence area. Also, the total covered area of the house cannot exit the 275 sq.m.
All second-hand property including houses, apartments etc, have no VAT charge.
Building plots/land are also exempt from VAT (this regulation is changing soon).
*Since 2012, eligible person for a lower VAT charge of 5% can be a citizen of a non European member country also.
Contact us for more information.