Cyprus VAT on Property Purchases in Cyprus
Guide to VAT on property purchases in Cyprus. Covers standard and reduced rates, exemptions, worked examples, and buyer protections. Value Added Tax (VAT) is a major cost consideration when buying property in Cyprus. Understanding how VAT applies ensures buyers plan budgets accurately and avoid surprises.
Standard Cyprus VAT Rate
• Standard VAT rate: 19%.
• Applies to new properties sold by developers.
• Calculated on the sale price of the property.
• Not applicable to resale properties.
Reduced Cyprus VAT Rate
• Reduced VAT rate: 5%.
• Applies to the first 200 sqm of a buyer’s primary residence.
• Eligible only if the buyer uses the property as their main home for at least 10 years.
• Any sqm beyond 200 is taxed at 19%.
• Must be applied for through the Tax Department before purchase.
Exemptions from Cyprus VAT
• Resale properties: No VAT applies.
• Certain land transactions may be exempt depending on planning status.
• Inherited properties are VAT-free.
• Gifted properties are also exempt.
Worked Example: Primary Residence
A buyer purchases a 180 sqm apartment in Nicosia for €250,000:
• Entire property eligible for 5% VAT.
• VAT = €12,500 instead of €47,500 at 19%.
• Buyer saves €35,000.
Worked Example: Large Villa
A 280 sqm villa in Limassol sells for €500,000:
• First 200 sqm at 5% VAT = €25,000.
• Remaining 80 sqm at 19% VAT = €76,000.
• Total VAT = €101,000.
Case Study: First-Time Buyer
A Cypriot teacher purchased a 150 sqm apartment as their main residence. They qualified for reduced VAT, lowering upfront costs and making ownership affordable.
Case Study: Investor
A Russian investor bought three new apartments in Limassol. As these were not primary residences, VAT at 19% applied in full, significantly increasing acquisition costs.
Checklist for Cyprus VAT Planning
1. Confirm if the property is new (VAT applies) or resale (no VAT).
2. Check eligibility for 5% VAT on primary residence.
3. Apply for reduced VAT before signing.
4. Calculate VAT for properties larger than 200 sqm.
5. Ensure VAT costs are included in the budget.
FAQs on VAT in Cyprus Property Purchases
Q: Do I pay VAT on resale property?
A: No, VAT only applies to new builds.
Q: Can foreigners apply for 5% VAT?
A: Yes, if the property is used as a primary residence.
Q: What if I sell before 10 years?
A: The buyer may be required to repay some VAT benefit.
Q: Are commercial properties subject to VAT?
A: Yes, standard 19% applies.
Q: Is VAT refundable?
A: Not for individuals, though developers may reclaim VAT on construction.
Final Recommendations
VAT significantly impacts property purchase costs in Cyprus. Buyers should confirm eligibility for reduced rates early, especially for primary residences, and calculate VAT before committing.