Cyprus Extends 5% VAT on New Homes Until End of 2026

Cyprus extends 5% VAT on new homes until the end of 2026 — emergency legislation passed. The transitional period for the reduced VAT rate was originally set to expire in June 2026. However, due to significant delays in planning and building permit approvals caused by local government reform, the Cypriot parliament has passed emergency legislation extending the 5% VAT rate on new residential properties until the end of 2026. The goal is to prevent developers and buyers from bearing extra costs resulting from state-related delays.

Which Projects Qualify for the Reduced Rate?

To benefit from the “old” VAT rules, the developer must have submitted a planning permit application before October 31, 2023. Such projects are relatively limited in number, but they are still available on the market.

Old vs. New VAT System – Key Differences

Under the old system:

• 5% VAT applies to the first 200 m² of buildable area.
• No restrictions on total property value.
• 19% VAT applies proportionally to any area exceeding 200 m².

Under the new system, stricter limits on size and value apply:

• 5% VAT applies only to the first 130 m², provided the property value does not exceed €350,000.
• For values between €350,000 and €475,000 – mixed rate: 5% on the first €350,000, 19% on the remainder.
• For areas from 130 m² to 190 m² – 5% on the first 130 m², 19% on the remaining area.
• If the property exceeds 190 m² or €475,000, the full amount is subject to 19% VAT.

This is a favourable time to enter the Cyprus property market – whether you are considering buying for permanent residency, personal use, or as an investment. Leave a request on our website. We will be happy to answer your questions and help select the best projects in Cyprus tailored to your goals.