Cyprus Property VAT from 1 September 2026: The 18-Month Rule
Cyprus's new VAT test for buildings took effect on 1 September 2026. A building's age no longer decides whether its sale carries VAT; what matters is whether it has been in systematic use for at least 18 months.
By RealDeal team · 4 min read · Published 1 Sept 2026 · Updated 8 Oct 2026
Contents
From 1 September 2026, Cyprus applies a new test to decide whether the sale of a building is subject to VAT. Under two decrees published in February (K.D.P. 102/2026 and 103/2026), the age of a building no longer determines its VAT treatment. What matters now is its history of use. This article explains what changed, works through three examples and sets out what buyers, sellers and developers should check.
What changed
| Until 31 August 2026 | From 1 September 2026 | |
|---|---|---|
| When a sale carries VAT | Within five years of completion, unless an unrelated person used the building for at least 24 months | Before the building's first occupation |
| What counts as use | Use by an unrelated person for 24 months | Systematic use for at least 18 months, including owner-occupation, personal use or leasing |
| Unused building over five years old | Exempt | Subject to VAT |
| 5% rate after brief prior use | Use could disqualify the building | Can still apply if sold before 18 months of use |
The new definitions are short but decisive. First occupation is the first use of a building after delivery or construction on a systematic basis, whether by the owner, for personal use or through a lease. First use is systematic use for at least 18 months. A building sold before reaching that point is treated as new and its sale carries VAT. After it, the sale is exempt. According to market commentary, any 18 months of continuous use counts, whether by the owner, a tenant or the developer itself.
Three examples
Deloitte's examples show how the outcome can flip:
- An unused building completed more than five years ago. Under the old rules its sale was exempt, because five years had passed. From 1 September it is subject to VAT, because it has never had 18 months of systematic use.
- A building completed three years ago and used throughout by its owner or a related person. Under the old rules its sale carried VAT, because no unrelated party had used it for 24 months. From 1 September it is exempt, because it has had more than 18 months of systematic use.
- An apartment let for six months and then sold to the tenant. Under the old rules the sale carried VAT and the 5% rate was not available. From 1 September the sale still carries VAT, but the tenant can claim the reduced rate if the other conditions are met.
Renovations
For the reduced 5% rate on renovating a private residence, the home must be at least three years old. The 18 months of systematic use now count towards that requirement.
Who should check what
- Developers with unsold stock completed years ago should note that age alone no longer makes a sale VAT-exempt. Records of systematic use, such as lease agreements, occupancy logs and utility bills, become important evidence.
- Buyers of resale homes should ask for evidence of the property's use history: 18 months of systematic use is what takes a sale outside VAT.
- Buyers of new builds remain subject to VAT, but the reduced 5% rate for a primary residence can still apply within its size and value limits.
Open questions
Advisers point to issues that will become clearer with Tax Department practice: how systematic use will be evidenced, how vacancy periods are treated, and how to handle transactions close to the 1 September transition. KPMG also highlights the eligibility for the reduced rate where a property has prior use as an area to review.
What this means
The change shifts the key question from "how old is the building?" to "how has it been used?". For anyone buying, selling or developing property in Cyprus, a building's use history is now a core part of due diligence, and transactions should be checked against the new test before signing.
This article is for information only and is not tax or legal advice.