5% or 19% VAT on Property in Cyprus: What to Check Before Paying a Deposit

An apartment is advertised at “€300,000 + VAT”. At 5%, the tax would be €15,000. At 19%, it would be €57,000. The difference is substantial, but eligibility for the reduced rate cannot be established from a single line in a listing.

Before reserving property in Cyprus, establish whether the transaction is subject to VAT, which rules apply to the property and whether the buyer qualifies for the reduced rate. In some cases, different portions of the price are taxed at different rates.

This article concerns the Republic of Cyprus. Prepared on 26 September 2026. All calculation examples are hypothetical.

When does 5% VAT apply, and when is the rate 19%?

The standard VAT rate in Cyprus is 19%. A reduced rate of 5% is available, among other cases, for the purchase or construction of a home used as a primary and permanent residence, subject to the relevant requirements and approval by the tax authority.

This is not a universal discount on new-build properties. First, establish whether the transaction itself is subject to VAT. Then assess whether the conditions for the reduced rate are met.

Source: Cyprus Tax Department: VAT rates (in Greek) .

Who can qualify for the reduced VAT rate?

According to the Tax Department's guidance, the relief may be available to adults who are citizens of Cyprus or other countries and acquire a home for use as their primary and permanent residence in the Republic.

Foreign citizenship therefore does not itself exclude eligibility. Equally, buying your “first apartment in Cyprus” does not automatically establish entitlement. The actual intended use of the home and the other requirements matter.

Source: Tax Department: eligibility and compliance checks for the reduced VAT rate (in Greek) .

How do the property's size and value affect eligibility?

Under the general regime introduced by the 2023 amendments, the 5% rate applies to the first 130 m² of qualifying buildable area, up to a value of €350,000, provided that the home's total qualifying area does not exceed 190 m² and its total value does not exceed €475,000.

These limits must be considered together. Falling within the overall limits does not necessarily mean that the entire price is subject to 5% VAT. Part of the value may be subject to 19%. Exceeding the overall limits under the general regime can remove eligibility for the reduced rate entirely.

Special and transitional provisions exist. Do not use the area stated in a marketing listing without checking it: the calculation requires the area established under the applicable rules and project documents.

Sources: Tax Department: reduced VAT and Circular 11/2023 (in Greek) ; Circular 11/2023, published by the Cyprus Chamber of Commerce and Industry (in Greek) .

Why are permit dates particularly important in 2026?

Transitional provisions may apply to certain properties. Two apartments with similar prices and sizes may therefore have different VAT calculations.

In an announcement dated 4 May 2026, the Tax Department explained the application of transitional rules to certain applications affected by delays in the permitting process. A deadline of 31 December 2026 is provided for qualifying cases.

The announcement concerns properties for which a planning permission application was submitted, or planning permission was obtained, by 31 October 2023, subject to further conditions relating to the building permit date.

For the category described in the announcement where the building permit had been issued by 31 December 2024, the application deadline was 15 June 2026. That date had already passed when this article was prepared.

This is not a general extension of the relief for all purchases. Eligibility under the transitional regime should be established from the permits and the history of the reduced VAT application.

Source: Tax Department: transitional provisions announcement of 4 May 2026 (in Greek) .

A €300,000 apartment: two simple examples

These examples demonstrate the difference between the rates. They do not cover a mixed calculation where the reduced rate applies only to part of the value. The Tax Department publishes a calculation tool for preliminary assessment.

Source: Tax For All: VAT calculation tool for purchasing or building a home .

What happens if you later rent out or sell the property?

The relief is linked to the property's subsequent use. According to official guidance, if a beneficiary stops using the home for their own residence before ten years have elapsed, they must notify the tax authority within 30 days.

As a general rule, the difference between the reduced and standard VAT rates must be repaid in proportion to the remaining period. Specific exceptions are provided for.

Before selling, letting or changing the use of the property, check the consequences for the relief previously received. Your rental return or net sale proceeds calculation may need to include a VAT repayment.

Source: Tax Department: rights and obligations of reduced VAT beneficiaries (in Greek) .

How do you apply for 5% VAT?

There is a prescribed application and approval process for the reduced rate. The Tax Department publishes guidance for home purchases and construction through Tax For All.

Its materials include application forms, declarations for spouses and co-applicants, and an architect's certificate. The precise documentation depends on the circumstances of the application.

Discuss with your lawyer and seller how payments will be handled before approval, which VAT rate will appear on invoices and what happens if the relief is refused or granted only in part.

Sources: application guidance (in Greek) ; Tax Department forms and supporting materials (in Greek) .

What should you check before paying a deposit?

1. The price. Is it quoted including or excluding VAT?
2. The transaction's tax treatment. Why is the sale subject to VAT, and which rate is assumed in the offer?
3. The intended use. Do your actual plans meet the conditions for the relief?
4. Area and value. Which figures are used in the calculation, and which documents support them?
5. Permits and dates. Is there a basis for applying transitional provisions?
6. The reduced VAT application. Who is preparing the documents, and what stage has the application reached?
7. The contract terms. How will the amount payable change if relief is refused or applies only in part?

Frequently asked questions

Can a foreign buyer qualify for 5% VAT?

Yes. Foreign citizenship does not itself exclude eligibility. The requirements relating to the applicant, property and residential use must be met, and the relevant approval obtained.

Can I buy a holiday apartment with 5% VAT?

Occasional visits should not automatically be treated as use of the property as a primary and permanent residence. Check your intended use before including the relief in your budget.

If the apartment costs less than €350,000, does 5% apply to the entire price?

Not necessarily. Value is only one criterion. The area, applicable regime and buyer's entitlement to the relief also matter.

Does 5% VAT work the same way in Limassol, Paphos and Larnaca?

Choosing a particular city does not itself establish eligibility. The applicable requirements and documents must be checked for a property anywhere in the Republic of Cyprus.

Does obtaining permanent residency automatically qualify me for 5% VAT?

No. Immigration status and VAT relief are separate matters. Approval under one procedure should not be treated as confirmation of eligibility under the other.

Is a developer's promise of 5% VAT sufficient?

No. Request the calculation and its legal basis, have the documents reviewed by an independent adviser and follow the prescribed procedure. Marketing statements do not replace tax authority approval.

This article provides general information. Eligibility, transitional provisions, qualifying area and the taxable value must be assessed using the specific property documents and the buyer's circumstances. The examples do not constitute individual tax advice.