Uncertainty in The VAT Regulations In Cyprus in an Overwhelming Market!
It is no surprise that Cyprus prices in housing, everyday products, and materials, and the insane increase in inflation have caused crazy rises in prices of the real estate market…
With this issue, the Finance Ministry has been trying since February to Apply a Bill to help resolve this but also allow the younger generation to invest or buy a home, something that is increasingly becoming harder by the years.
The Law has decided to create a VAT Tax discount where the VAT will drop from 19% to 5% although only under some specific and rather hard requirements. These are as follows:
- For Houses of €350,000 and under as well as a max size of 220m2 will be able to apply for the VAT discount.
- Although the discount (5%) will only apply for the first 170m2 and the rest of it is subject to the traditional 19% VAT.
- For Apartments, the requirements are for up to the value of €200,000 and a max size of 110m2 will be able to apply for the VAT discount.
- Once again only the first 90m2 of the apartment will apply for the VAT discount and the remaining space is subject to the normal VAT rate.
The catch here is that to be able to obtain this discount you must apply for VAT service by 30/11/2022 and you must already have a building permit.
This is something that will be very hard or even impossible for a young couple looking to buy their first home.
Experts quickly came to the realization that this will not work out and will fall flat.
Construction costs have seen an increase of up to 20% driving the price to build a house to new heights that can be too much for the first-time home builder.
In addition, a developer’s representative has stated that with the current level of inflation, it will be impossible to find a house or apartment with the size requirements to fit the bill and to be able to apply for the discount.
Effectively making it useless.
As of this moment, The Financial Ministry is still in process of making an update to their bill to better satisfy the requirements.
We will keep you updated.
I would also like to link down the great article this was inspired from written by Elias Hazou! You can learn all the details there!