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VAT on Property Purchases in
Cyprus
By Antonis Loizou, FRICS
Antonis Loizou & Associates
Ltd
Chartered Surveyors
Property Valuers - Project
Managers
25 July 2010
 Properties in Cyprus (buildings not land) with a planning permit after 4/2004,
attract a 15% VAT added on top of the acquisition price. Because there is some confusion on the
whole situation, we will attempt to lay down some basic clarifications.
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Land/building plots do not attract VAT.
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Business that pays VAT on a property acquisition and provided it is used as part of the business;
they can deduct the VAT paid from the VAT received.
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House buyers can claim up to 10% of the paid 15% provided after taking possession of the property,
they can prove that it is their main residence (permanent). They will require the production of
electricity/telephone/water bills for a permit say of 6 months after taking possession.
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VAT is paid only once, so even if a building attracts VAT which was paid by, say, a previous buyer,
it will not attract again VAT in the case of resale.
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Buildings which are renovated/extended and then sold do not attract VAT since VAT refers to new and
not “used” properties.
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Foreign buyers, who can prove that their Cyprus property is their main residence, may be in a position to claim the 10%
refund – e.g. in case someone works in the Gulf and his base is in Cyprus.
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In order to claim the refund the house must be of a certain size and the refund refers to a scale
as follows:
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The Ministerial council has passed the following
rules regarding the refund of VAT for first purchase of a house /flat or construction of
property.
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Purchase of property
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Adopted
Cost/m² €
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Maximum
Area m²
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Refund
of 10% VAT €
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Flat One bedroom
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1623
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65
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9175
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Flat. Two bedroom
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1623
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100
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14113
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Flat three bedroom
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1495
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130
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17053
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Flat three bedroom
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1495
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150*
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16900
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Detached house
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1708
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200*
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15143
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Semi-detached
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1281
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200*
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Building a house
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Building a house
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854
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130
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9657
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Building a house
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854
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250*
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10771
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Building a house
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854
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300*
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26000
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Purchase of house from a family with 4
children
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854
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250
(grant for 145)
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10771
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Purchase of house from a family with 6
children
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1708
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250
(grant for 175)
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26000
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*Note: The
return of the V.A.T. applies for houses/flats with an area of up to 250m², but the V.A.T. is
refunded on the area of up to 130m² only. If you built/buy a residence of more than 250m² then no
V.A.T. is refunded at all, as you are judged to be not in the economic zone that needs the
incentive. In between sizes the refund is a ratio.
*The square
meterage refers to the total covered area.
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If
you buy a house on a plot and for reasons of your own, you want to lower your VAT liability, you
can buy the plot under a sales contract and ask the developer to build the house for you under a
building contract. You will pay less transfer fees (since you pay only on the land and not on the
house as well) and VAT will apply only to the building cost and not on the building and land. A
good way around saving lots of money, but there are other unrelated to the VAT complications in
terms of contractual responsibilities of the contracting parties.
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Under the E.U. regulations Cyprus must impose a VAT (15%) on land buyers. Due to the economic
situation it got a postponement for another 2 years.
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The refund of VAT bears no interest.
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Rents are not subject to VAT, but licenses are.
www.aloizou.com.cy
www.aloizou.ro
www.aloizou.ru
ala-HQ@aloizou.com.cy
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