The Cyprus Parliament passed the law for a reduced 5% VAT rate applied for the first 130 sqm of a residence, either for a house or a flat, with a value of €350,000.
The reduced VAT will apply for houses and apartments with an area of less than 130 square meters, and for residences of 131-190 square meters valued at €475,000, a 19% VAT will be forced for every square metre above the 130 sqm limit.
The law also includes a provision for allowing reduced VAT on the first 190 sqm of a constructed area for individuals with disabilities or other special needs.
A transitional period is also provided during which the proposed regulations will not apply in cases where urban planning permission has been obtained or an application has been submitted within four months from the law’s effective date.
If a house is 170 sq.m, its buildable area is valued at €310,000 and its total transaction value is €410,000, the first 130 sq.m. will be charged with 5% VAT and the remaining 40 sq.m. will be charged with 19% VAT.