Since Cyprus’ EU accession in 2004, a standard VAT rate of 19% is required to be paid when buying a new property. However, following a recent VAT Amendment Law, a reduced VAT rate, starting from 5%, is applicable for the acquisition of new residential properties. For the reduced rate to be in effect, certain terms and conditions must be met:
- The property must be used as the primary and permanent residence of the applicant (for the next ten years).
- The applicant has not acquired any other residence in Cyprus with a reduced VAT rate.
- The applicant must be an individual, over 18 years old, thus legal entities are excluded.
The reduced VAT rate of 5% is applied on the first 200 square meters (building coefficient) of the property as per the architectural plans submitted to the Authorities. On the remaining square meters, the standard rate of 19% is imposed.
No VAT is charged on the purchase of land.
Annual Property Taxes and Fees in Cyprus
1) Immovable Property Ownership Tax
Immovable Property Tax has been abolished as of the 1st of January 2017.
Until the end of 2016, the registered owner of the property was liable to an annual Immovable Property Ownership tax calculated on the market value of the property as at 1st of January 1980 (paid by the 30th of September in the year). Immovable Property Tax was payable to the Inland Revenue Department of the Republic of Cyprus.
Rates are as follows:
|Value of Property
(as of 1/1/1980)
Up to €40.000
2) Local Authority Fees
Depending on the size of your property, local authorities charge between €85 – €500 per annum for regular refuse collection, street lighting, sewerage and similar community services. Communal Services fees are payable to your local municipal authority.
3) Municipality Tax
As the registered owner of the property, you are required to pay an annual Municipality Tax, calculated on the market value of the property as at 1st of January 1980. Rates vary from 1‰ – 2‰. Municipality tax is payable to your local municipal authority.
4) Sewerage Tax
As the registered owner of the property, you are required to pay an annual Sewerage Tax, calculated on the market value of the property as at 1st of January 1980. Rates vary from 3‰ – 7‰. Sewerage taxes are payable annually to your local sewerage board.