5% Reduced VAT Rate on building or acquisition of a primary residence
- May 12
- 2 min read
5% VAT Reduced Rate Cyprus Property 2026: Which Regime Applies to You?
If you are buying or building your primary residence in Cyprus, the 5% VAT reduced rate Cyprus property 2026 is still available but the rules depend entirely on when your applied for a planning permit or when it was obtained. The Cyprus Tax Department clarified on 4 May 2026 that there are now two distinct regimes, each with different coverage limits and deadlines.
Regime 1 - Previous Rules: 5% on First 200 sq.m. (No Price Threshold)
This applies if your planning permit was issued or applied for on or before 31 October 2023. Under these transitional arrangements, the 5% rate covers the full first 200 sq.m. of buildable area with no property value cap.
There are two sub-cases with different deadlines:
Case A - Building permit issued by 31 December 2024:
• You must submit your 5% VAT application by 15 June 2026 ⚠️
Case B - Building permit issued after 1 January 2025 (or not yet issued by 31 December 2026):
• You must submit your 5% VAT application by 31 December 2026
Regime 2 - Current Rules: 5% on First 130 sq.m. up to €350.000
This applies if your planning permit was applied for after 1 November 2023. Under the current regime:
• The 5% rate covers only the first 130 sq.m. of buildable area
• Subject to a property value cap of €350.000
Which Regime Are You Under?
Previous Regime (i) | Current Regime (ii) | |
Planning permit | Applied/issued by 31/10/2023 | Applied after 01/11/2023 |
Coverage | First 200 sq.m | First 130 sq.m. |
Price cap | None | Up to €350.000 |
Deadline | 15 Jun 2026 or 31 Dec 2026 | Standard VAT rules |
All applications must be submitted through the Tax For All (TFA) system and no other method is accepted.
Next steps:
Check your planning permit date first. If it’s on or before 31 October 2023, you are under the more generous previous regime.
Then check your building permit date. If it was issued before 31 December 2024, you have less than 6 weeks to act until 15 June 2026.
Frequently Asked Questions (FAQs)
Q: What is the 5% VAT reduced rate on property in Cyprus in 2026?
A: Cyprus offers a 5% reduced VAT rate on the purchase or construction of a primary residence. The rules depend on when your planning permit was applied for (before or after 31 October 2023).
Q: What’s the difference between the previous and current 5% VAT regime in Cyprus?
A: The previous regime (planning permit by 31/10/2023) covers the first 200 sq.m. with no price cap. The current regime (planning permit after 01/11/2023) covers only the first 130 sq.m. up to €350.000.
Q: My planning permit was applied for before October 2023 - what is my deadline?
A: If your building permit was issued by 31 December 2024, you must apply by 15 June 2026. If your building permit was issued after 1 January 2025, your deadline is 31 December 2026.
Q: How do I apply for the 5% VAT rate on my Cyprus property?
A: Submit your Statutory Declaration (υπεύθυνη δήλωση) exclusively through the Tax For All (TFA) system.
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