VAT on a new-build home in Cyprus in 2026: when it is 5% and when it is 19%

If you are moving to Cyprus for good, the VAT on a new-build home can be 5% on most of the price. If you are buying a place for the winters, or one to let, it is 19% on all of it. On a €300,000 apartment that is the difference between €15,000 and €57,000 of tax.

Every rule below has been checked against the text of the law and the Tax Department's guidance as at 25 September 2026.

Two rates and four numbers

The standard rate of VAT in Cyprus is 19% (section 17 of the VAT Law 95(I)/2000). The reduced rate of 5% comes from Table C of the Fifth Schedule to the same law, as rewritten by Law 42(I)/2023, gazetted on 16 June 2023. It is built from two thresholds and two ceilings.

The law measures the area from the architectural drawings submitted for planning permission: the buildable area that counts towards the plot's building coefficient. The plot itself is not included. The figure comes from the area calculation in those drawings, not from a price list, so for a home close to 130 or 190 m² ask the developer for that calculation before you reserve. The value is the price excluding VAT — under section 14 of the law, the value of a sale is the amount that, with the VAT added, equals what you pay.

Two adjustments apply to particular buyers. For a family with at least four children, the area ceiling rises by 15 m² for each child beyond the third; in the examples to Circular 11/2023 the reduced-rate 130 m² rises by the same amount, and the value limits do not change. For a person with a disability as the law defines it, the reduced rate covers the first 190 m² whatever the total area; the €475,000 ceiling still applies, and in the Tax Department's examples the €350,000 limit does not.

The value limits can be revised by a Tax Department notice after a Council of Ministers decision; as at 25 September 2026 they stand at €350,000 and €475,000.

Who qualifies

The law gives the relief to any individual who, at the same time:

• ·is 18 or over on the date of the claim;
• ·is acquiring the home to use as their main and permanent residence in the Republic of Cyprus;
• ·owns no other home in Cyprus that was bought at the reduced rate;
• ·has repaid any government housing grant they received.

Nationality is not on the list. The Tax Department put it plainly in its announcement of 25 June 2025: the 5% rate is open to citizens of Cyprus or of any other state, aged over 18, who acquire a home to use as their main and permanent residence in Cyprus.

Two more conditions concern the property and the household. The relief applies to a sale before first occupation, meaning a new home that nobody has yet used on a systematic basis, whether by living in it or letting it. A married couple gets the relief on one home: with one spouse's claim, the other files a declaration that they own no other Cyprus home they live in as their main residence.

Why a holiday home pays 19%

The relief is for one home: the one you live in. The law sets no day count, but it does ask for proof. Within 12 months of taking possession you file bills in your name — electricity, water, telephone, municipal charges — showing that you live there. A place you come to for the winter while your main home stays in the UK is a second home, and the VAT on it is 19%.

Since Brexit, UK citizens are third-country nationals in Cyprus. The relief does not ask about your passport, but it does ask you to live in the home, and whether you can live here year-round is an immigration question. Buying a property does not settle it; ask a specialist lawyer before you count on the 5%. The purchase itself, step by step, is covered in buying property in Cyprus as a foreigner.

Who else does not get 5%

• ·Buy-to-let. A flat you rent out is not your main home, so the VAT is 19% on the full price. What that does to the numbers is in investment property in Cyprus: yields 2026; the rules for short lets are in Cyprus short-term rental rules.
• ·A company. Only an individual can claim the relief, so a company pays 19%.
• ·A home that has been lived in. Once a building has been occupied, its sale carries no VAT at all; transfer fees apply instead (see below).

Worked examples

When a home stays within both ceilings but is over 130 m² or over €350,000, only part of the price is taxed at 5%. The Tax Department's Circular 11/2023 of 28 November 2023 works it out like this:

• ·up to 130 m² and over €350,000: the first €350,000 is taxed at 5%, the rest at 19%;
• ·over 130 m² and up to €350,000: a 130/area share of the price is taxed at 5%, the rest at 19%;
• ·over 130 m² and over €350,000: the 130/area share is taken of €350,000, not of the whole price, and everything else is taxed at 19%.

In the fourth row the home is over both thresholds, so the 130/150 share is taken of €350,000: €303,333 at 5% and the remaining €116,667 at 19%.

The fifth and sixth rows show the cliff at the ceiling: a €5,000 difference in price becomes a €49,950 difference in tax. The same cliff exists on area — a 190 m² home at €340,000 carries €32,032 of VAT, a 191 m² one at the same price €64,600. Compare homes near a limit on the price with VAT.

The older 200 m² rule, until 31 December 2026

Before Law 42(I)/2023 the relief was more generous: 5% on the first 200 m² of buildable area, with no overall size ceiling and no price ceiling. A 275 m² cap had been in the law from 2012 and was removed by Law 119(I)/2016.

Section 63 of the VAT Law kept the older rule for buildings whose planning permit was granted, or applied for, by 31 October 2023, provided the claim was made within three years of Law 42(I)/2023 coming into force — that is, by 15 June 2026. Law 109(I)/2026 (gazetted on 24 April 2026) added a proviso for cases held up by the planning authorities: the Tax Department may examine such claims until 31 December 2026.

The Tax Department explained how this works in its announcement of 4 May 2026. Claims under the older rule are accepted where the planning application was submitted, or the permit issued, by 31 October 2023, and the building permit was issued after 1 January 2025 or will not have been issued by 31 December 2026. Where the building permit was issued on or before 31 December 2024, the claim had to be made by 15 June 2026, and that deadline has passed.

Whether a particular development still falls inside this window depends on its permit dates, so ask the developer for them before you reserve. The VAT breakdown shown on each home in our catalogue uses the 2023 rule.

How to claim: Tax For All, documents, deadlines

The buyer makes the claim; the developer applies it. In order:

1. 01Sign the contract of sale. The relief attaches to a specific property and contract.
2. 02Open an account on the Tax Department's Tax For All portal and get a tax identification number if you do not have one. Since 27 May 2024 claims are accepted only there; paper forms are refused.
3. 03Submit the claim with the contract, the architectural drawings of the home (elevations, a 1:100 plan, the area calculation), a copy of the planning application stamped as received and a copy of the planning permit itself. Without the copies of the application and the permit the Tax Department will not start examining the claim. The developer holds these documents, so ask for them with the contract.
4. 04Receive the reduced-rate certificate through Tax For All and pass it to the developer. The law obliges the seller to charge 5% once the document from the Tax Department is in hand.
5. 05Within 12 months of taking possession, file the proof that you live there: bills in your name for electricity, water, telephone, municipal charges.

You can claim at any stage of construction, but before the home passes into your possession. The law leaves one late window — up to 12 months after possession — and only at the Tax Department's discretion, where the delay is explained by absence from Cyprus, illness or a comparable reason.

When the VAT is paid

On a new build the VAT is paid in step with the price: under section 9 of the VAT Law, a payment received before handover counts as a sale on the day it is paid, to the extent of the amount. Each staged payment carries its own VAT, which the developer pays over to the state. Until the developer has your certificate, the Tax Department says 19% must be charged on any payment, so make the claim as soon as the contract is signed. Where the certificate sets two rates, both apply on every invoice. How staged payments work and what protects you along the way is on the off-plan page; every cost of the purchase in one table is on the cost of buying a new build.

Selling or letting within ten years

The relief comes with a condition: you live in the home for ten years. If you stop using it as your home before then — you sell, you let it, you move away — the law requires you to notify the Tax Department within 30 days and pay the difference between 19% and 5% for the years remaining out of ten.

An example. A 90 m² home at €300,000: at 19% the VAT would have been €57,000, at 5% it was €15,000, so the relief saved €42,000. Live there four years and then let it, and six of the ten years are left: you repay €42,000 × 6/10 = €25,200. The Tax Department counts the unused period in calendar months.

There are two exceptions: the owner's death, and a transfer to an adult child who qualifies for the relief in their own right at the time. If it turns out you never met the conditions, the full amount of VAT is recovered. Once you have settled with the Tax Department, you can claim the relief again on another home without waiting for the ten years to run out.

The Tax Department does check. In its announcement of 25 June 2025 it said compliance checks on homes bought at 5% were continuing and invited anyone not entitled to the relief, or who had stopped living in the home early, to repay voluntarily, in up to 12 instalments where paying at once is hard.

VAT or transfer fees, never both

Under section 10 of the Land Registry fees law (Cap. 219), no transfer fee is charged where VAT is charged on the same sale. On a new build from a developer that is the normal case: VAT is charged, so there is no transfer fee, whether the VAT is at 5% or 19%.

Where no VAT is charged — a resale, after first occupation — the transfer fee is payable, reduced by 50%. The only case with no reduction is a mortgagee sale. The two routes side by side, with figures, are in off-plan vs resale in Cyprus.

A short checklist before you reserve

• ·Will this be your main home? Yes: work on 5%. No: budget 19% on the full price from day one.
• ·Area from the drawings and price against 190 m² and €475,000. A home just under a limit and one just over it can differ by tens of thousands of euros in tax.
• ·The development's permit dates. If the planning application went in before 31 October 2023, check whether the 200 m² rule can still apply to you before the end of 2026.
• ·Timing. File on Tax For All as soon as the contract is signed.

The wider picture on buying, owning and selling is in Cyprus tax 2026. How we check articles like this one against the law is set out in how we check facts.

This summarises the law and the Tax Department's guidance, not your case. The Tax Department decides each claim; for anything unusual — a joint purchase, an inheritance, a disability claim — speak to a tax adviser with Cyprus practice before you sign.