Buyers of those projects whose application for urban planning was submitted by the developer before October 31, 2023, inclusive, will be able to take advantage of the old (more profitable) rules. There are few such facilities left, but they are still on the market.
The reason for the decision is that due to the reform of local government in Cyprus, there have been serious bureaucratic delays, and building permits are being issued longer than usual. So that neither developers nor buyers would suffer because of this, it was decided to extend the validity period of the transition period (without the received building permit, the buyer cannot complete the transaction and file a declaration for preferential VAT).
Key differences between the "old" and the "new" VAT system
The "old" system:
- 5% VAT on the first 200 sq.m. meters of the total living area.
- There are no restrictions on the total value of the property.
- 19% VAT on an area over 200 sq.m. meters.
The "new" system:
It has strict restrictions on both area and cost.:
- 5% VAT only on the first 130 sq.m. meters and provided that the cost of the object does not exceed 350,000 euros.
- Combined rate (if the price is 350,000 euros 475,000 or an area of 130,190 square meters):5% for the first 350,000 euros (or the first 130 square meters),19% for the remaining amount up to 475,000 euros (or for the remaining area up to 190 square meters)
- 19% on everything if the area is over 190 sq. m. or the cost is over 475,000 euros.
What does this mean for the buyer in practice?
- If you are buying an apartment in a building that has a construction permit submitted before October 31, 2023, you will fall under the old system with a favorable rate of 5% for the first 200 square meters. m without a price limit. But it is necessary to file a declaration before the end of 2026.
- If you are buying an apartment in a project for which the building permit was obtained after October 31, 2023, then strict limits are already in effect for you in 2026.
Source: Cyprus Mail
