The Parliament of Cyprus has adopted a new law that regulates the rules of application of the preferential VAT rate on real estate.
34 deputies voted "in favor" of the innovations and only one "against".
In particular, it will now be possible to apply 5% VAT on new housing within a year after the beneficiary takes possession of the housing. The law was adopted based on a proposal from the AKEL party, which stated that many owners are late in taking the necessary actions to comply with the requirements for VAT on real estate.
By the way, the deputies considered it appropriate to give the Tax Commissioner the right to accept applications from new owners within twelve months after they take possession of the residential property. AKEL MP Andreas Pasiurtidis said that the main purpose of the new law is to cover beneficiaries who, for reasons of force majeure, were unable to apply for reduced VAT within the prescribed timeframe.
Recall that according to the new rules, which came into force on November 1, 2023, the reduced VAT rate of 5% applies to new houses and apartments with an area of up to 130 m2 and a value of up to 350 thousand euros. If the area of the apartment or house is larger or more expensive, BUT up to 190 m2 and up to 475 thousand euros, then for the additional area or value must pay the full 19% VAT. If the apartment or house is larger than 190 m2 or more expensive than 450 thousand euros, the preferential rate does not apply. The full 19% VAT is applied to such real estate. An exception is made for low-income citizens. In particular, for this category of citizens preferential VAT applies to the first 190 m2 of housing.