Reduced 5% VAT on housing in Cyprus - conditions and calculation

The reduced 5% VAT rate applies to buying a new home that will be your main and permanent residence. Under the new rules (Law 42(I)/2023), 5% applies to the first 130 m² within €350,000 of the price, and the rest is taxed at 19%. If the price is above €475,000 or the area exceeds 190 m², there is no relief - 19% on the full price.

For families with 4 or more children, the 190 m² cap rises by 15 m² for each child beyond the third. A buyer with a disability gets 5% on the first 190 m² regardless of total area, with the same price caps. The old rules - 5% on the first 200 m² with no price caps - still apply if the planning permit application was filed before 31.10.2023: Law 109(I)/2026 extended them to 31.12.2026 for some properties.

The relief is claimed through a declaration to the Tax Department on the Tax For All portal before the keys are handed over. The home must stay your main residence for 10 years: if you sell or rent it out earlier, you pay back the difference to 19% for the remaining years. For PR without moving to Cyprus the relief usually does not fit - VAT is then 19%.