The Cabinet of Ministers of Cyprus has approved an amendment to the VAT Law, reducing the rate from 19% to 5% for the construction and renovation of both public and private buildings intended for educational institutions. The decision, made on Thursday, November 27, reflects the government’s commitment to supporting the development of modern, high-quality educational infrastructure.
According to Finance Minister Makis Keravnos, the VAT reduction is directly aimed at lowering the cost of constructing and upgrading educational facilities, allowing schools and higher education institutions to modernize their buildings faster and with fewer expenses.
Who Will Be Eligible for the Reduced Rate
Under the amendment, the 5% VAT rate applies to public schools, private educational institutions registered under the 1971 Law on Private Schools and Supplementary Education Centers, as well as private colleges and institutes listed in the register of higher education institutions under the 1996 law. Organizations and institutions officially recognized by the regulator after submitting an application will also be eligible, provided their activities are directly linked to educational services.
Education Investment as Part of European Strategy
The Finance Minister emphasized that this measure aligns fully with European policy, which views education as a high-return social investment. Supporting schools and universities strengthens social equality, creates modern learning conditions, and contributes to the country’s long-term development.
He clarified that the reduced rate will apply to all types of work — from construction and repair services to the cost of materials. This makes expansion and modernization projects significantly more affordable.
Duration of the Measure and Financial Impact
The new tax benefit will be reviewed by the Ministry of Finance every five years. Ministry specialists will analyze its budgetary impact, effectiveness, and the need for adjustments. The VAT reduction is expected to cost the state around €2 million per year, a sum that will be offset by the economic benefits generated from the development of educational infrastructure.
What Happens Next?
The amendment will come into effect after approval by Parliament, and educational institutions will be able to apply for the reduced rate immediately after the publication of the relevant regulations. Real estate experts expect increased activity in the construction and modernization of educational buildings as early as 2026, as the reduced VAT significantly lowers the cost of major projects.