Cyprus VAT as it applies to Immovable Property, and the Cypriot VAT Rebate Scheme
VAT on New Property Purchases
Since the 1st of May 2004 in the Republic of Cyprus,
VAT is chargable at 15% on new homes, unless
the planning application for the property to be sold was deposited with the appropriate
authority before the above date.
Upon the sale of a new property the buyer
pays VAT at a rate of 15% when:
- the property is going to be used for the first
time i.e. is a new property
- the sale agreement provides that the property
or part of the property (apartment) and the associated land will be transferred to the buyer together
Please note that since January 1st 2008, VAT is also charged on all land purchases in the Republic of Cyprus at a rate of 15%.
The leasing of property is an exempt
transaction and there is no VAT charge.
The right to property usage, however, is a taxable
transaction as from 1 May 2004 and the VAT charge
is 15%. |
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The VAT Rebate Scheme
Following a huge public outcry from the Cypriot voting public following the announcement that new properties would be subject to VAT from May 1st 2004, the government created the VAT rebate scheme as a means of helping lower income Cypriots to afford a home purchase in the face of ever increasing real estate prices at the time.
In essence, this government directive lets buyers claim back two thirds of the 15% VAT they paid for their new home
The scheme applies to all permanent residents of Cyprus. VAT rebates are available under the following criteria:
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The property must be the applicant's only primary residence in the Republic of Cyprus.
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The applicant must be a European Union citizen, and must be agedt 18 or over.
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Only permanent residents of the Republic of Cyprus qualify for the VAT rebate scheme
All Applicants must complete this Ministry of Finance form, an English translation of which is available exclusively through Aphrodite, and return it to the MOF along with the relevant proofs of identity and residence.
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Please note that VAT rebates are only available for residences with a covered floor-area of up to two-hundred and fifty square metres, as the Cypriot government considers buyers able to afford a larger home as also being able to afford the associated tax burden. |
Some developers are still advertising VAT-free properties in Cyprus. Is this too good to be true?
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We tell you what others don't.
Cyprus became a full European Union member on May 1st 2004. The same date saw the introduction of Value Added Tax on real estate. Now, in 2010, there are still a handful of property developers adertising 'VAT-Free Homes for Sale'. Telling you to buy now because numbers are strictly limited, they lead you to believe that you can make the investment of a lifetime, if only you take advantage of their amazing offer.
But in the Republic of Cyprus, VAT on properties has been a fact of life for six years, so how could there be any tax-free homes left after all this time?
On the whole, claims of VAT-free properties are just sales ploys to get you interested.
- The developer has strategically retained a handful of pre-VAT homes as bait.
And though these villas and apartments are ostensibly for sale, the developer has no intention of ever selling them, simply because so long as they remain part of the company's portfolio. he or she is able to quite legitimately advertise 'VAT-Free Properties in Cyprus'.
- The developer has re-purchased a small number of homes from previous buyers.
According to the laws governing tax in Cyprus, VAT is only chargeable on new homes, so if the developer sells a property, and then re-buys it from the client at a later stage, his or her company is once again able to advertise the aforementioned VAT-Free homes, and so catch your interest.
In either case, the bargains you're tempted by are not likely to be for sale at the bargain prices you might expect, no matter how amiable property developers or their sales staff may seem.
We don't just want to sell you a property.
We make sure you're safe, satisfied and informed.
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Additional Information
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Foreign Currency Transfers
Whether you're buying property overseas or not, there are many reasons for having to send money abroad. It is, however, not a commonly known fact that making an international currency transfer through your local bank is far from the cheapest approach.
Indeed, by simply using the services of a foreign currency broker you could quite literally save thousands in bank charges and exchange rates.
So whether you're buying a new home in Cyprus, VAT charges are due, or you're simply purchasing goods for import, take a look at how much you could save.
Find out more...
Disclaimer. Please note that the tax information given
on this website is displayed for guidance purposes only. It does not replace the need for professional advice by a qualified accountant.. E&OE
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