VAT on property in Cyprus: 5% reduced rate and 19% rate explained

In Cyprus, a reduced 5% VAT rate applies to the purchase or construction of a new primary residence, rather than the standard 19%. Under the current rules, this reduced rate applies to the first 130 m² of the property.

To qualify, the total buildable area must not exceed 190 m² and the total transaction value must not exceed €475,000. Within those limits, the 5% rate applies to the first 130 m² and the first €350,000 of value, and the 19% rate applies to any area or value above those thresholds.

A property larger than 190 m² or worth more than €475,000 is taxed at 19% on the whole purchase.

How much is VAT on property in Cyprus?

In Cyprus, VAT on property depends on the type of transaction. New residential properties carry a standard 19% rate, but buyers of a primary residence qualify for a reduced 5% rate on the first 130 m² (subject to the area and value limits set out below).

Resale properties, meaning those already occupied before sale, are VAT-exempt.

Building land sold by a VAT-registered vendor is subject to VAT at 19%.

For a primary residence purchase with a total value up to €475,000 and a total area under 190 m², the effective rate is 5% on the qualifying area and 19% on any excess.

The reduced rate requires that the property be used as a permanent residence for 10 years. If the property is sold or rented within 10 years, the owner must notify the Tax Commissioner within 30 days of the change of use and repay the difference between the 5% and 19% VAT rates in proportion to the years left in the 10-year period.

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.

Cyprus VAT rates in 2026

Transaction type	VAT rate
New residential property (primary residence, first 130 m²)	5%
New residential property (area above 130 m², or non-primary)	19%
Resale / second-hand residential property	Exempt
Sale of building land (by VAT-registered vendor)	19%
Renovation of primary residence (3+ years old)	5%
Standard rate (goods and services, general)	19%

Reduced VAT rate 5% in 2026

The reduced VAT rate of 5% on a primary residence in Cyprus applies to the first 130 m² of the property and to the first €350,000 of its value. The 19% rate applies to any area or value above those points. The reduced rate is available only when both of these limits are met:

1. The total transaction value is at or below €475,000.
2. The total buildable area is at or below 190 m².

A property above either limit is taxed at 19% on its full price.

The 130 m² and 190 m² figures are the buildable area set by the building coefficient in the planning permit and architectural plans. This is not the covered area shown in some sales brochures, which can count verandas and other spaces. Buyers close to the limits should check the figure on the permit before assuming they qualify.

Individuals with disabilities are allowed a 5% reduced rate on the first 190 m² of a primary residence.

The 5% rate is open to individuals of any nationality, both EU and non-EU buyers. The applicant does not need to hold a Cyprus residence permit when applying, but the home must be used as their main residence in Cyprus. Companies and other legal entities do not qualify.

A buyer who has already used the 5% rate can apply again for a new primary residence. If the first property has not completed its 10-year period, the owner deregisters it, repays the VAT difference in proportion to the unused years, and the new application can then proceed with no need to wait out the remaining time on the first home.

Transitional or grace period

Article 63 of the VAT Law establishes a transitional arrangement for projects where planning permission was issued or applied for before October 31, 2023. Under this arrangement, the Tax Commissioner accepts declarations for the 5% reduced rate in the following cases:

1. A building permit was issued after January 1, 2025, or has not yet been issued by December 31, 2026.
2. Where a building permit was issued by December 31, 2024, the declaration must be submitted to the Tax Commissioner by June 15, 2026.

This extended review period was introduced by amending Law N. 109(I)/2026, published in the Official Gazette on April 24, 2026, to address delays caused by planning authorities.

The law

The new legislation is Law 42(I)/2023, published in the Government Gazette on 16 June 2023.

The transitional deadlines under Article 63 were further extended by amending Law N. 109(I)/2026, published in the Official Gazette (No. 5089) on April 24, 2026, allowing the Tax Commissioner to review pending declarations until December 31, 2026.

19% VAT on the sale of building land in Cyprus

The standard 19% VAT rate applies to the sale of building land (land with development potential) when the seller is a VAT-registered taxable person acting in the course of a business. This rule, introduced by amendment in 2018 under the VAT Law (Law 95(I)/2000 as amended), applies to land classified as building land under the relevant town planning or building regulations.

The key conditions that trigger 19% VAT on a land sale are:

• The seller is a taxable person (i.e., VAT-registered or required to be registered).
• The land qualifies as building land (either already permitted for construction or intended for development).
• The sale is made in the course of an economic activity.

Sales of bare agricultural land, or land without development potential, remain VAT-exempt. Private individuals selling land they have held for the long term (outside any business activity) are not subject to VAT on the transaction, though this depends on the specific circumstances and the Tax Department's characterisation of the activity.

If you are purchasing or selling building land in Cyprus and are unsure whether VAT applies, professional advice from a property lawyer is recommended, as misclassification can result in significant liability.

Previous VAT 5% regime

The previous rules apply to any project for which a planning permission application was submitted before 31 October 2023.

Conditions under the previous regime

A reduced rate of 5% is applied to the first 200 sq m of a property, provided:

1. It is a new house/apartment.
2. It will be used as the individual's primary residence for 10 years.
3. The applicants have reached the age of 18.

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 m².

Application procedure

You must submit the declaration for the reduced VAT rate digitally through the Tax For All (TFA) platform. This submission takes place after the contract of sale is signed and stamped, and after an initial payment goes to the developer.

The applicant cannot occupy or use the property before submitting this online declaration.

Required documents

1. Passport / ID copy
2. Marriage certificate (if applicable)
3. Application Form (attached)
4. Planning / Building Permits and the applications for them
5. Architectural plans confirming the total buildable internal area
6. Residence permit (if applicable)
7. Stamped Contract and receipt of payment
8. Contractor's licence