First occupation
A building's first systematic use after completion. From 1 September 2026, a sale before 18 months of such use carries VAT; after that, the sale is VAT-exempt.
Updated 12 Oct 2026How it works
First occupation is the VAT test that decides whether the sale of a building in Cyprus counts as the supply of a new building, which carries VAT, or of a used one, which is exempt. Two decrees published on 27 February 2026 (K.D.P. 102/2026 and 103/2026) amended the Fifth and Eighth Schedules of the VAT Law (95(I)/2000) with effect from 1 September 2026, as KPMG and Deloitte report.
- First occupation is the first use of a building after delivery or construction on a systematic basis: by the owner, for personal use, through a lease or in any other way.
- First use is systematic use or exploitation of the building for at least 18 months.
A building and its land sold before 18 months of systematic use is treated as new, and the sale carries VAT. After that point, the sale is exempt from VAT and transfer fees apply instead.
Until 31 August 2026 the test was age: a sale within five years of completion carried VAT unless an unrelated person had used the building for at least 24 months. The outcome can now flip. An unused building completed more than five years ago is now subject to VAT, while one its owner has used for three years is now exempt.
Why it matters when you buy
The question is no longer how old a building is, but how it has been used. For a resale home, ask the seller for evidence of use, such as lease agreements and utility bills. A home sold before 18 months of systematic use can still qualify for the reduced 5% VAT rate if the other conditions are met, and the 18 months count towards the three-year age needed for the 5% rate on renovations.
How use will be proven, and how periods when a property stands empty are treated, will become clearer with Tax Department practice.