Cyprus Extends 5% VAT Transition to End-2026 for Delayed Permits
Cyprus has extended the transitional regime for the 5% VAT rate on primary residences. Where planning delays held up an application, the Tax Commissioner can now examine it until 31 December 2026 under the more generous pre-2023 rules.
By RealDeal team · 2 min read · Published 8 May 2026 · Updated 8 Oct 2026
Cyprus has extended the transitional period during which some buyers can still claim the 5% VAT rate on a primary residence under the pre-2023 rules. Parliament approved the change on 17 April 2026. Amending Law 109(I)/2026 was published on 24 April, and on 4 May the Tax Department set out which cases it covers.
Two regimes for primary homes
| Pre-June 2023 rules (transitional) | Current rules (Law 42(I)/2023) | |
|---|---|---|
| Area at 5% | First 200 m² of buildable area | First 130 m² |
| Size cap | None | Total buildable area up to 190 m² |
| Value cap | None | 5% on the first €350,000; total value up to €475,000 |
| Rate above the threshold | 19% | 19% |
Source: Mondaq.
The old rules apply to projects whose planning permit application was submitted by 31 October 2023. Under the original transitional arrangement, both regimes ran in parallel from 16 June 2023 to 15 June 2026.
Who now has until 31 December 2026
The Tax Commissioner can examine applications until the end of the year where both conditions are met:
- the planning permit 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.
The extension is not automatic. If the building permit has not yet been issued, the VAT application must be submitted together with the building permit application, so that the Commissioner can assess the reason for the delay.
Who still faces 15 June 2026
Where the planning permit was applied for or issued by 31 October 2023 and the building permit was issued on or before 31 December 2024, the deadline does not move: declarations must be submitted by 15 June 2026. All declarations for the reduced rate must be filed through the Tax For All (TFA) system.
Why it matters
The difference can be large. A buyer of a €700,000 new-build with 250 m² of buildable area would pay 5% on the first 200 m² under the old rules and 19% on the rest. Under the current rules, the same home exceeds both the €475,000 value cap and the 190 m² size cap, so the full 19% applies. Buyers in projects filed before 31 October 2023 should check their permit dates now.
This article is for information only and is not tax or legal advice.