Until June 2026, the current preferential VAT regime on new properties in Cyprus remains in effect, offering very favorable conditions for buyers. If you purchase a property intended for primary and permanent residence, a reduced VAT rate of 5% applies to the first 200 m², with no limitation on the property price. If the property exceeds this size, the standard VAT rate of 19% is applied to the area above 200 m².
From June 2026, however, a new VAT system will come into force, which will be significantly stricter. The reduced 5% VAT rate will apply only to the first 130 m², and only if the purchase price of the property does not exceed €350,000.
The standard 19% VAT rate will then apply:
- to the area from 131 m² to 190 m²,
- or to properties priced between €350,001 and €475,000, provided that the total value does not exceed €475,000 and the size does not exceed 190 m².
However, once a property exceeds 190 m² or its price surpasses €475,000, a major change occurs: the entire property will be subject to the 19% VAT rate, not just a portion of it.
This means that even a relatively smaller property – for example, 120 m² – may fall under the full 19% VAT rate if its price exceeds €475,000 (which may happen, for instance, with luxury seaside properties).
It is also important to note that the reduced 5% VAT rate applies only to the first purchase of a property in Cyprus, and only if it is intended to serve as the buyer’s primary and permanent residence.
For this reason, the current situation is particularly attractive. Until June 2026, buyers have a unique opportunity to benefit from the existing, significantly more favorable VAT regime, which allows them to secure a lower tax rate even on larger or more expensive properties. For many, purchasing before the legislative change may therefore represent a highly advantageous financial decision.
