VAT on Property in Cyprus: When You Pay 5% and When You Pay 19%
Reviewed by Eleni Philippou · Advocate · Cyprus Bar Association · LL.M. (Distinction)Last updated: July 4, 2026
New-build property in Cyprus carries VAT at the standard 19%, but a reduced 5% rate applies to the first 130 m² of a qualifying primary residence — provided the property’s value is up to €350,000, its total transaction value is up to €475,000, and its total area is under 190 m². Above those limits the whole property is taxed at 19%. Resale properties carry no VAT.
Key takeaways
- Resale property carries no VAT; VAT applies to new-build / first-sale property.
- The standard rate is 19%; a reduced 5% applies to the first 130 m² of a qualifying primary residence.
- Eligibility limits: property value ≤ €350,000, total transaction value ≤ €475,000, total area < 190 m².
- Exceed 190 m² or €475,000 and the entire property is taxed at 19% — a cliff edge, not just the excess.
- The 5% rate needs a 10-year primary-residence commitment; selling or ceasing to use it early triggers a VAT clawback.
- Only a natural person (not a company) qualifies, once per applicant, under Law 42(I)/2023, with transitional relief to 31 December 2026.
Is VAT 5% or 19% on property in Cyprus?
It depends on what you are buying and how you will use it. New-build property is subject to VAT: the standard rate is 19%, but Cyprus grants a reduced 5% rate on the first 130 m² of a home a buyer will use as their primary residence, subject to value and area limits. Resale property is not subject to VAT at all.
So the practical answer is: resale — no VAT; new-build second home or investment — 19%; new-build qualifying primary residence — 5% on the first 130 m², then 19% on any excess within the caps.
Who qualifies for the reduced 5% VAT rate?
The reduced rate is aimed squarely at genuine home buyers. To qualify, you must meet all of the conditions below — miss one and the standard 19% applies.
- Primary residence
- The property must be used as your main and permanent residence in Cyprus, not a holiday home or investment.
- Natural person
- Only an individual can claim the 5% rate — not a company.
- New / first sale
- The rate applies to new-build property (first sale), not resales, which carry no VAT anyway.
- Once per applicant
- You cannot have benefited from a reduced-rate VAT certificate in the previous 10 years (broadly, one per person/couple).
The 130 m², €350,000, €475,000 and 190 m² rules
Under Law 42(I)/2023, the reduced rate is bounded by both area and value, and the two interact. The 5% rate applies to the first 130 m² up to a value of €350,000; between those limits and the outer caps of 190 m² and €475,000, the excess is taxed at 19%; and beyond the outer caps, the entire property is taxed at 19%.
| Scenario | VAT treatment |
|---|---|
| ≤ 130 m² and ≤ €350,000 | 5% on the whole property |
| 130–190 m² (value ≤ €475,000) | 5% on the first 130 m²; 19% on the rest |
| Value €350,000–€475,000 | 5% on the first €350,000; 19% on the excess |
| Over 190 m² OR over €475,000 | 19% on the entire property |
Worked example: a 150 m² primary residence
The split rule is easiest to see with numbers. Assume a qualifying new-build primary residence of 150 m² within the value caps.
150 m² qualifying home
The first 130 m² is charged at 5%.
The remaining 20 m² is charged at 19%.
Because the area (150 m²) is under 190 m² and the value is within the caps, only the excess above 130 m² bears the higher rate — not the whole property.
But if the home were over 190 m² or over €475,000, the entire property would be taxed at 19% — the cliff edge that catches larger homes.
Does VAT apply to resale property?
No. VAT is charged on the first sale of new property; resales on the secondary market do not carry VAT. That is why a resale buyer pays transfer fees (reduced by 50%) instead, while a new-build buyer pays VAT and no transfer fees.
This is also why the new-build-versus-resale comparison matters so much for total cost: on a new build the VAT rate — 5% or 19% — is usually the largest single line, so confirming eligibility for the reduced rate can be worth tens of thousands of euros.
The 10-year rule and VAT clawback
The 5% rate comes with a commitment: the property must remain your primary residence for 10 years. If you sell it, or stop using it as your main home, before the 10 years are up, you must repay part of the VAT you saved — the clawback.
How the clawback is calculated
The amount repayable is broadly the VAT benefit × (10 − years of residence) ÷ 10. So leaving after 4 years repays roughly 6/10 of the benefit. There are limited exceptions (for example, certain transfers to an adult child), but plan on the 10-year commitment being real before you claim the 5% rate.
Can a company or a non-resident claim the 5% rate?
A company cannot — the reduced rate is only for a natural person using the property as their primary residence. This is one reason buying through a company is usually the wrong structure for a home.
A non-resident individual can qualify in principle, because the test is use of the property as a primary residence in Cyprus rather than nationality — but the primary-residence requirement and the 10-year commitment mean it genuinely has to become your main home. A holiday home or pure investment does not qualify and is taxed at 19%.
When must I apply for the reduced rate?
Timing matters: the application for the reduced rate is made to the Tax Department, and it must be submitted in good time — before the property is delivered to or occupied by you. Leaving it too late can mean losing the reduced rate on a property that would otherwise have qualified.
Your advocate or accountant typically prepares the application with the supporting evidence that the property will be your primary residence. Get this into the timeline early rather than treating it as a formality at completion.
Old vs new rules and the transitional deadline
The regime changed with Law 42(I)/2023, which cut the area eligible for 5% from the old 200 m² (with no value cap) down to the current 130 m² / €350,000 structure, with the 190 m² / €475,000 outer caps. Which rules apply can depend on when the property obtained planning permission.
Transitional relief lets some properties under the older, more generous regime continue to qualify, but that transitional window runs to 31 December 2026. If you are relying on the old rules, confirm the property’s planning-permission date and the current transitional position — after the deadline, the new limits govern.
Check which regime applies
If a source describes a 200 m² limit with no value cap, it is the pre-2023 regime. The current rules are 130 m² / €350,000 with 190 m² / €475,000 outer caps, and transitional relief for older projects ends 31 December 2026.
Key facts
- Standard VAT (new build)
- 19%
- Reduced VAT (primary residence)
- 5% on the first 130 m²
- Value limit
- ≤ €350,000 (transaction value ≤ €475,000)
- Area limit
- < 190 m² (over that, whole property at 19%)
- Resale property
- No VAT
- Primary-residence commitment
- 10 years — early sale triggers VAT clawback
- Governing law / transition
- Law 42(I)/2023; transitional relief to 31 Dec 2026
Frequently asked questions
Is VAT on property in Cyprus 5% or 19%?
New-build property carries VAT at the standard 19%, but a reduced 5% rate applies to the first 130 m² of a qualifying primary residence within the value and area limits. Resale property carries no VAT. So it is 5% for a qualifying new home (on the first 130 m²), 19% for a new second home or investment, and none on a resale.
What are the size and value limits for the 5% VAT rate?
The 5% rate applies to the first 130 m² up to a property value of €350,000, with outer caps of 190 m² total area and €475,000 total transaction value. Between the inner and outer limits, the excess is taxed at 19%. Above 190 m² or €475,000, the entire property is taxed at 19%.
Does resale property in Cyprus carry VAT?
No. VAT applies only to the first sale of new property. Resales on the secondary market carry no VAT; instead the buyer pays transfer fees (reduced by 50%). This is why new-build versus resale makes such a difference to total buying costs.
What happens if I sell before 10 years — is there a VAT clawback?
Yes. The 5% rate requires the property to remain your primary residence for 10 years. Selling or ceasing to use it as your main home earlier triggers a clawback of part of the VAT saved, broadly the benefit multiplied by the unexpired years over ten. Limited exceptions exist, but treat the 10-year commitment as real.
Can a company claim the reduced 5% VAT rate?
No. The reduced rate is only available to a natural person using the property as their primary residence. A company does not qualify, which is one reason buying a home through a company is usually the wrong structure. A non-resident individual can qualify only if the property genuinely becomes their main residence.
When do I have to apply for the reduced VAT rate?
The application is made to the Tax Department and must be submitted before the property is delivered to or occupied by you. Applying too late can forfeit the reduced rate on an otherwise qualifying property, so build the application into your timeline early, with evidence that the property will be your primary residence.
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General legal information, not legal advice, and no lawyer–client relationship is created. Figures are current to the date above and depend on your specific transaction. Speak to a qualified Cyprus advocate before acting.