VAT 5% and 19% in Southern Cyprus – Current Rules
How the system works
When you buy a new property, VAT is payable. The basic (standard) rate is 19%. An individual buying a property as their main and permanent residence can obtain the reduced rate of 5% — but only up to certain limits.
Crucially, the rate is determined neither by price alone nor by size alone. The system combines area and price and works with two pairs of thresholds:
- Threshold for 5%: the first 130 m² of covered area and the first €350,000 of the price.
- Absolute caps: 190 m² of area and €475,000 of price. Once either is exceeded, the reduced rate is lost entirely.
Older properties sold on the secondary market (resale) are generally fully exempt from VAT — transfer fees apply instead of VAT. The reduced 5% rate therefore only concerns new properties on their first sale.
When the reduced 5% rate applies
The reduced rate applies only when all of the following conditions are met:
- New property — first sale / first use, not a resale.
- The buyer is an individual (not a company). Nationality does not matter — both EU and non-EU citizens are eligible.
- The property is used as the main and permanent residence in Cyprus.
- The residence is kept for at least 10 years (see obligations below).
- Area and price are within the caps — up to 190 m² and up to €475,000.
Note: being a “Cyprus tax resident” is not a condition. What matters is that the property will be your main residence in Cyprus — so even a foreigner who moves there can obtain the reduced rate.
Area and price limits
| Covered area | Price (excl. VAT) | |
|---|---|---|
| Threshold up to which 5% applies | first 130 m² | first €350,000 |
| Absolute cap (above it, no 5% eligibility) | 190 m² | €475,000 |
If the property exceeds even one of the caps (more than 190 m² or more than €475,000), the reduced rate cannot be applied at all and 19% is charged on the entire purchase price — not just the amount above the limit.
How VAT is calculated
A) Property within the caps (up to 190 m² and up to €475,000)
- 5% on the portion up to 130 m² and up to €350,000
- 19% on the portion above 130 m² / above €350,000
B) Property above a cap (more than 190 m² or more than €475,000)
- 19% on the entire purchase price (no reduced rate)
Practical examples
| Price / area | Why | Calculation | Total VAT |
|---|---|---|---|
| €300,000 / 110 m² | Area and price below the threshold → whole amount at 5% | 300,000 × 5% | €15,000 |
| €420,000 / 160 m² | Area under 190 m², price over €350,000 → combined rate | 350,000 × 5% + 70,000 × 19% | €30,800(≈ 7.3%) |
| €600,000 / 180 m² | Price over €475,000 → 5% falls away entirely | 600,000 × 19% | €114,000 |
| €450,000 / 210 m² | Area over 190 m² → 5% falls away entirely (even though price is under €475,000) | 450,000 × 19% | €85,500 |
| investment / rental | Not a main residence → always 19% regardless of area or price | whole price × 19% | 19% of price |
Note on the calculation: the exact 5%/19% split (by price and by m²) is assessed by the Tax Department based on the specific property. The figures shown are indicative — for an actual purchase, have the calculation confirmed by a lawyer or tax advisor.
When the standard 19% rate applies
The 19% rate on the entire purchase price always applies when at least one of these situations occurs:
- the property’s area exceeds 190 m²,
- the price exceeds €475,000,
- the property is bought as an investment (rental, Airbnb, holiday home),
- the property is not used as the main residence,
- the buyer is a legal entity (company).
If an apartment or house is bought for rental or as an investment, 19% applies to the entire purchase price regardless of area or value.
Key obligations and warnings
- 10-year condition: you must use the property as your main residence for 10 years.
- Repayment of the difference (clawback): if you sell or rent it within those 10 years, you must notify the Tax Department within 30 days and pay back the proportional part of the difference between 5% and 19% for the remaining years.
- Repeated use: the reduced rate can be used again for a new main residence — if you deregister the previous property and pay back the proportional part of the VAT. (The old rule that 5% could be used only once no longer applies in its original form.)
- Resale: the reduced rate does not apply to it — an older property is usually entirely VAT-free (transfer fees apply).
- Persons with disabilities: are entitled to 5% on the first 190 m² of the main residence.
- Older projects: for projects with a building permit / application submitted before set dates, transitional (old) rules may apply; this relief is extended until 31 December 2026.
How to apply for the reduced rate
- The application (declaration) is submitted on an official form to the Tax Department (Tax Commissioner).
- Supporting documents are attached — e.g. ID, the sale contract, the building permit and proof that it is the main residence.
- The process is usually handled by a lawyer or the developer.
Quick overview: 5% vs 19%
| Criterion | 5% (reduced) | 19% (standard) |
|---|---|---|
| Property type | New, first sale | New for investment; resale is mostly VAT-free |
| Buyer | Individual (any nationality) | Company, or a person not buying a main residence |
| Purpose | Main and permanent residence | Investment, rental, Airbnb, holiday use |
| Area | up to 190 m² (5% on the first 130 m²) | over 190 m² → 19% on the whole |
| Price (excl. VAT) | up to €475,000 (5% on the first €350,000) | over €475,000 → 19% on the whole |
Disclaimer: This is a general overview, not legal or tax advice. Cyprus VAT rules are amended from time to time (the latest amendments were published in February 2026, effective September 2026). For an actual purchase, have the information and calculation confirmed by a Cypriot lawyer or tax advisor.
