Cyprus made preferential VAT on real estate purchases more affordable

According to the law changes, when buying a small-space property in Cyprus it is possible to save on taxes. The new owner can pay 5% value added tax instead of 19%. Previously, the exemption included properties of up to 150 sqm, but the parliament has decided to extend this limit to 190 sqm.

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However, the change could cause tensions with the European Union, as the general directive only provides for VAT reduction for properties up to 150 square metres.

Many officials have expressed support for extending the size criteria to comply with the Cyprian standard of enlarged living spaces, while the finance ministry has urged that the EU directive be adopted before the stipulated deadline.

According to the Cyprus Ministry of Finance, 52% of residential property transactions were subjected to 5% VAT in 2021.

Source: Cyprus Property News

Author: Julia Naymushina