Updated: September 14, 2025
In Cyprus, a reduced 5% VAT is available for a new primary residence, instead of the standard 19%. This rate applies to the first 130 sq m, provided the property value is up to €350,000 (total transaction €475,000) and the total internal area does not exceed 190 sq m. The standard 19% will apply to the remaining area.
The Value-Added Tax, or VAT, is a general, broadly based consumption tax in the European Union. The Cyprus VAT rate for 2025 is 19%.
Transactions involving land and real estate in Cyprus are included in the supply and services category and are subject to VAT.
Law 42 (I)/2023 introduced new criteria for the VAT on primary residences in June 2023. The reduced rate remains the same (5%), but the eligible built area has been reduced. A transitional or grace period applies.
The previous rules apply to any project for which a planning permission application was submitted before 31 October 2023.
A reduced rate of 5% is applied to the first 200 sq m of a property, provided:
The 200 sq m limit refers to the internal covered areas, excluding stairs.
What if a property is larger but satisfies the other criteria?
The standard 19% will apply to the remaining sq m.
In June 2023, Cyprus changed the reduced VAT on primary residence criteria.
Under the new rules, the reduced rate of 5% applies to the first 130 sq m of a primary residence, provided that:
Individuals with disabilities are allowed a reduced rate of 5% on the first 190 sq m of a primary residence.
The new legislation is Law 42(I)/2023, published in the Government Gazette on 16 June 2023.
The new rules will not apply where:
The application for a reduced VAT rate is submitted to the relevant VAT department:
Our team of Cyprus property lawyers provides the following services:
Do you pay VAT when buying real estate in Cyprus?
Yes. You pay a VAT of 19% unless the property is your primary dwelling. First-time buyers are allowed a reduced VAT of 5% under certain conditions.
When is VAT payable when buying property in Cyprus?
VAT is always payable for real estate. If you mean when it needs to be paid, it is usually upon purchase. You can also apply for a reduction.
Is there a 5% VAT on renovations of properties in Cyprus?
Yes. A reduced VAT of 5% applies to the following services: plumbing and electrical, carpentry, painting, and construction. The property must be considered “older”; at least three years have passed since moving into it. The materials are included in the reduced VAT if their value is more than 50% of the value of the whole service.
How do I apply for the reduced % VAT rate of 5% on purchasing a Cyprus property?
You will apply with a declaration to the Tax Department. You must apply before moving into the property: at any time during construction or, if you bought it from a developer, before moving in.
An exception to this rule was made in April 2024: it is now possible to apply for reduced VAT within twelve months of moving in, provided you missed the previous deadline due to absence from the Republic, illness, or other serious reasons.
There is a list of required documents, which you must attach. These documents are specified in the Declaration. With some exceptions, you cannot apply if you have received a grant under the Special Grant (Purchase or building of a home) Law.
George K. Konstantinou
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