Cyprus Extends 5% First-Home VAT Relief to End of 2026
Cyprus moved the transitional deadline for the old 5% reduced VAT on a first home from 15 June to 31 December 2026. Here is what changed and the new rules.
Cyprus has extended the transitional deadline for the older, more generous version of its 5% reduced VAT rate on a first home from 15 June 2026 to 31 December 2026. Parliament approved the extension on 17 April 2026 and it was published in the Official Gazette (Issue 5089) on 24 April 2026. Many guides and listings online still show the old 15 June date, so buyers part-way through a purchase have an extra six months to lock in the better terms.
TL;DR: If your home had a planning permit issued, or a permit application submitted, by 31 October 2023, you can still use the old 5% VAT rule (5% on the first 200 m², no value cap). The extension to 31 December 2026 applies where the building permit was issued after 1 January 2025, or has not been issued yet. Where the building permit was already issued on or before 31 December 2024, the deadline stayed 15 June 2026 and has now passed. After the applicable deadline, only the new framework applies: 5% on the first 130 m², capped at a property value of €350,000.
What changed
The 2023 reform of Cyprus VAT on primary residences introduced a tighter 5% scheme and a transitional period that let older projects keep the previous, more generous terms. That transitional window was due to close on 15 June 2026. The April 2026 amendment pushed it back to 31 December 2026, giving buyers and developers with qualifying permits more time to complete and file.
To qualify for the old transitional rules at all, the home must have had its planning permit issued, or its permit application submitted, on or before 31 October 2023.
The extension is then conditional on the building permit date, which is the part most summaries leave out:
- Building permit issued after 1 January 2025, or not yet issued: the deadline to file with the Tax Department is 31 December 2026.
- Building permit issued on or before 31 December 2024: the deadline remained 15 June 2026. That date has passed, so these buyers fall under the new framework.
Check which of the two applies to your property before assuming you have until the end of the year.
Old rules vs new rules
| Old transitional rule | New framework | |
|---|---|---|
| 5% rate applies to | First 200 m² | First 130 m² |
| Property value cap | None | €350,000 |
| Total buildable area cap | None | 190 m² |
| Total transaction value cap | None | €475,000 |
| Above the caps | 19% only on area over 200 m² | 19% on the entire value if over 190 m² or €475,000 |
| Deadline to apply | 31 December 2026 if the building permit was issued after 1 Jan 2025 or is still unissued; 15 June 2026 (now passed) if it was issued by 31 Dec 2024 | Standing rule, no deadline |
Under the new framework, a home between 131 m² and 190 m² that stays within the value caps gets 5% on the first 130 m² and 19% on the rest. A home over 190 m² of buildable area, or over €475,000 in total value, loses the reduced rate entirely and pays 19% on the full price.
Who this affects
This matters most to people relocating to Cyprus who are buying or building a new primary residence from a developer (resale property between private owners carries no VAT). The reduced rate is for a genuine primary and permanent residence, for personal use, on a new build that has not been occupied before, and it cannot have been claimed on the same property by a previous buyer.
Note that VAT on a first home is separate from the 2026 reform that abolished stamp duty on property contracts signed on or after 1 January 2026, which lowered transaction costs across the board.
What to do
If you have a qualifying planning permit dated on or before 31 October 2023, check your building permit date next. Where it was issued after 1 January 2025 or has not been issued, the extension to 31 December 2026 is worth using: the old 200 m² rule with no value cap can save a substantial amount on a larger home compared with the new €350,000-capped scheme. Where the building permit was issued by 31 December 2024, the 15 June 2026 deadline applied and has passed. If your planning permit is newer than 31 October 2023, plan around the 130 m² and €350,000 limits from the start.
Update, 1 September 2026: the rate rules above are unchanged, but the test for whether a building sale is a VATable supply at all has been replaced. See Cyprus VAT on property sales, the new first-occupation test.
For the full picture on property tax in Cyprus, including capital gains, transfer fees, and rental income, see our Cyprus Real Estate Tax Guide 2026.