From 27 May 2024, it will only be possible to apply for the preferential 5% VAT on real estate electronically through the Tax For All (TFA or 'Taxes For All') digital portal. It will also only be possible to obtain the relevant certificate once the application process has been completed via the TFA website.
This was announced by the Cyprus Tax Department on Monday 13 May.
The department said that in order to apply, it will be necessary to create an account on the TFA portal and then, if it is a new taxpayer, to submit an application for registration in the tax registry. Incidentally, for the convenience of customers, a guide has been published on the website which describes all the necessary procedures and even includes a calculator for calculating the amount of VAT. In the Tax Department of Cyprus stressed that written applications will be accepted from residents of the island in local district offices only until 17 May inclusive.
It should be remembered that the cost of new properties in Cyprus includes VAT. This is charged at the standard rate of 19%. However, there is the possibility of applying a preferential rate of 5% if the property purchased is to be used as a primary residence. A number of conditions must be met.
The preferential VAT rate of 5% can be applied if
The purchaser of the property is a natural person and not a legal entity;
- The purchased property will be used as the owner's main residence in Cyprus for at least the next 10 years;
- the purchaser does not own any other property in Cyprus that was previously purchased using the preferential VAT rate;
- the property will not be let or otherwise used to generate income.
Currently, the preferential VAT rate of 5% applies to the first 130 m2 of residential property valued at up to €350,000. At the same time, the total value of the property may not exceed 475 thousand euros and its surface area may not exceed 190 m2.