VAT on property in Cyprus

VAT is charged on new-build property in Cyprus. A resale doesn't carry it. The standard rate is 19%.

A reduced rate of 5% exists for a home you will actually live in — and on a larger or more expensive home it covers part of the price rather than all of it.

Does VAT apply to your purchase at all?

VAT applies to new builds. A resale is exempt, and you pay transfer fees instead. If yours is a resale, this isn't your page — see how transfer fees work on a resale.

"New" isn't about the building's age, and it isn't about whether this is the first sale. A building counts as new if it's sold before anyone has established themselves in it — the law's term is "first establishment", meaning the first systematic use of the building, whether that's the owner living in it, using it themselves, or letting it. The building's planning application also has to have been filed after 1 May 2004.

Do you qualify for the 5% rate?

Your nationality is irrelevant — the Tax Department says expressly that a citizen of Cyprus or of any other country can qualify. What matters is that you will actually live in the property as your main and permanent home in Cyprus, and can prove it.

That's about VAT only. Whether you need permission to buy at all is a separate question, with its own rules.

The conditions:

• You're aged 18 or over.
• You're acquiring the property to use as your main and permanent home in Cyprus.
• You don't already hold another home in Cyprus that you bought at the reduced rate.
• If you've received a special housing grant, you've repaid it.

A holiday home, a home bought to leave empty, and a property bought to let don't qualify. Within 12 months of taking possession you have to file evidence that you live there — utility bills, for example, and the Tax Department's own FAQ names a detailed electricity statement.

Two points that surprise people:

• A married couple gets the reduced rate on one home between them, not one each. The spouse has to sign a declaration too, and theirs is wider than the applicant's own condition: it covers any other home in Cyprus they use as their main home, not only one bought at 5%.
• The law doesn't use the phrase "first residence", even though the Tax Department's own pages are titled that way. Owning a home in Cyprus that you didn't buy at the reduced rate doesn't disqualify you by itself.

What "main and permanent home" requires of someone who divides their time between two countries isn't settled: the law doesn't define the phrase, and the Tax Department hasn't published criteria for it.

What you'll actually pay

The 5% rate applies to the first 130 m² of buildable area, up to €350,000 of value. The rest of the price is taxed at 19%. Both rates appear on the same invoice. Buildable area is the area set by the building coefficient on the architectural plans submitted for planning permission — not the "covered area" most guidance talks about.

How the split is worked out:

• If the price is up to €350,000, the 5% rate applies to the share of the price that 130 m² represents out of the total buildable area — all of it, if the home is 130 m² or smaller.
• If the price is between €350,001 and €475,000, the 5% rate applies to that same share of €350,000.
• Everything else is taxed at 19%.

That split is the Tax Department's method, from its own circular. The law itself says only "the first 130 m² … up to the value of €350,000" and gives no formula.

Above €475,000 of total transaction value, or above 190 m² of total buildable area, the reduced rate doesn't apply to any part of the price. Not partially — at all. One euro over either limit moves the whole purchase to 19%.

A family with four or more children gets 15 m² more for each child beyond the third — on the Tax Department's reading, added to both the 130 m² portion and the 190 m² limit, with the €350,000 and €475,000 figures unchanged. For a buyer with a certified disability the reduced rate covers the first 190 m² of buildable area regardless of the dwelling's total area, under conditions this page doesn't cover.

Two grey areas. Which parts count towards buildable area — verandas, covered parking, storage, basements — is a planning question: the law simply points to the area on the plans submitted for planning permission. And it's unclear whether the €475,000 is measured before or after VAT, or whether separately priced parking, storage or furniture count towards it: the law says "total value of the transaction", while the Tax Department's circular says "value of the dwelling" in one place and uses the law's wording elsewhere.

Three worked examples:

• 150 m² at €350,000. 130 m² out of 150 m² is the share that gets 5%: €303,333 is taxed at 5% and €46,667 at 19%. VAT: €24,033.
• 120 m² at €370,000. The home is under 130 m², so the whole of the first €350,000 is taxed at 5% and €20,000 at 19%. VAT: €21,300.
• 130 m² at €475,000. €350,000 is taxed at 5% and €125,000 at 19%. VAT: €41,250. At €475,001, the same home pays 19% on the whole price. VAT: €90,250 — €49,000 more, for one euro on the price.

What most sources get wrong

"The reduced rate stops at €350,000" is wrong. €350,000 is not a cut-off. A €400,000 home of 130 m² or less still gets 5% on €350,000 of its price.

What if you stop living there?

If you stop using the home as your main home within 10 years, you repay the difference between 5% and 19% — but only for the part of the 10 years you weren't living there.

• You have 30 days from when you stop living there to tell the Commissioner of Taxation — the head of the Tax Department.
• The repayment is the difference between the two rates as they stood when the home was delivered or built, in proportion to the time you weren't living there.
• It can be paid in up to 12 instalments, or 24 in exceptional cases.

Since 16 June 2023 you can claim the reduced rate on another home within the 10 years, provided the repayment on the first one is made. The Tax Department's own FAQ still lists the 10-year wait as a condition; the law changed in 2023 and no longer requires it. Which of the two the Department applies in practice isn't clear from what it has published.

A declaration made with false information means repaying the full difference, and it is a criminal offence, punishable by a fine of up to twice the amount, up to three years' imprisonment, or both.

The Tax Department runs compliance checks on reduced-rate claims and recovers the difference where a home wasn't used, or stopped being used, as the claimant's main and permanent residence.

How do you claim it?

You file a declaration with the Tax Department before you take possession, and it has to be done online. It's a solemn declaration — a formal written statement that the facts in it are true.

• Since 27 May 2024 it goes through Tax For All, the Tax Department's online portal, and nowhere else — paper isn't accepted. You need a Cyprus Tax Identification Number and a Tax For All account linked to it, and so does a co-applicant or a spouse, where there is one.
• For a purchase, you can file at any stage before the property comes into your possession. The Commissioner of Taxation may allow a late filing up to 12 months after possession, but only where the delay was caused by absence from Cyprus, illness or another justified reason. That's a narrow discretion, not a second deadline.
• The seller charges 19% until you hand them the approval. Until the Tax Department's approval certificate exists, every invoice is at the standard rate — which catches people out on staged payments.
• The documents the law requires:
  • the sale contract, or the construction contract for a self-build;
  • the architectural plans;
  • a copy of the planning application, stamped as received — or, where the building doesn't need planning permission, the building-permit application and the building permit;
  • evidence that you live there, which may follow within 12 months;
  • the contractor's licence declaration;
  • evidence of construction, for a self-build.
• In practice, the Department won't start examining a declaration unless both the planning application and the planning permission are attached.
• Appeals against the Department's decision go to the Administrative Court, within 75 days of notification.

What if your building has an old planning application?

A more generous rule applies to buildings whose planning application was filed by 31 October 2023, and the window for claiming under it has largely closed.

The old rule gave 5% on the first 200 m² of buildable area, with no total-area limit and no value limit at all. It survives only for buildings where planning permission was obtained, or applied for, by 31 October 2023, and where the declaration was filed within three years of 16 June 2023.

The test is the building's planning date, not your contract date: a later buyer of the same plot can rely on a planning application filed before the cut-off. If you think your building falls into this group, get the Tax Department's written position for your own building rather than relying on a general page like this one.

Common questions

Every figure checked on or after 14 August 2026, against the VAT Law on CyLaw and the Tax Department's own circular, FAQ and announcements. If it's been a while since that date, confirm the position hasn't moved again.