The standard rate of VAT in Cyprus is 19%. Below it sit reduced rates of 9%, 5% and 3%, plus a zero rate, and the one most people arrive asking about is the 5% rate on a first home, which since June 2023 has been squeezed into a much tighter box: the first 130 m² of buildable area, up to €350,000 of value, on a property costing no more than €475,000. If you run a business here, registration becomes compulsory once taxable turnover passes €15,600 in any 12-month period. All of it is administered by the Tax Department under the VAT Law of 2000, Law 95(I)/2000.
The rates, and what falls into each
| Rate | Main categories |
|---|---|
| 19% | Standard. Most goods and services, professional fees, new-build property, building land |
| 9% | Hotel accommodation, restaurant and catering services, local passenger transport |
| 5% | Foodstuffs, pharmaceuticals, books and newspapers, renovation of older homes, qualifying first homes |
| 3% | Entry to theatres and performances, waste collection and treatment, sewage disposal, disability aids |
| 0% | Exports, qualifying ship and aircraft supplies, and a defined list of essential goods |
The zero rate on essentials, which covers bread, milk, eggs, baby food, nappies and women's sanitary products among other items, began as a response to food-price inflation and has been rolled forward year by year rather than made permanent. The Tax Department confirmed it again for the period 1 January to 31 December 2026. Anyone pricing goods for 2027 should assume nothing.
When you have to register
Registration is compulsory once taxable supplies in the preceding 12 months exceed €15,600, or once you expect to cross that figure in the next 30 days. You then have 30 days to register. Zero-rated sales count towards the threshold; exempt supplies, such as insurance and most financial services, do not.
Two situations bypass the threshold entirely. A business not established in Cyprus registers from its first taxable supply here, with no minimum at all, which catches a good many foreign traders by surprise. And a separate threshold of €10,251.61 applies to goods acquired from other EU member states. Voluntary registration is open to anyone below the limits, and it is usually the right call for a business whose costs carry VAT and whose customers are themselves registered.
Returns are quarterly and filed electronically, with payment due by the tenth day of the second month after the quarter ends, so the quarter to 31 March falls due on 10 May. The penalties are not ruinous but they compound: €85 for every month of late registration, and 10% of the tax due where payment is late, plus interest on the balance. Late returns carry a separate fixed penalty per return, which has changed more than once in recent years and is worth confirming with the Tax Department rather than assuming.
Input VAT on costs used to make taxable supplies is deductible against the VAT you charge. Costs attributable to exempt supplies are not, which is why an insurance broker or a residential landlord absorbs VAT as a straight cost rather than passing it through.
The 5% first-home rate and its ceilings
Law 42(I)/2023, published on 16 June 2023, rewrote the rules for anyone buying or building a main residence. The 5% rate now applies to the first 130 m² of buildable residential area and to the first €350,000 of value. Above that slice, the standard 19% applies to the remainder, but only if the property stays inside two hard caps: total value of €475,000 and total buildable area of 190 m². Break either cap and the reduced rate disappears for the whole purchase, not just the excess.
On a €400,000 apartment within the area limits, that means 5% on €350,000 and 19% on the remaining €50,000, so €27,000 of VAT instead of €76,000 at the standard rate. Push the same flat to €480,000 and the bill jumps to €91,200, because the property has fallen out of the scheme altogether. Buyers with a disability get a more generous version: 5% on the first 190 m², without the total-area cap.
The relief comes with a ten-year string attached. The property must be your main and permanent residence, and if you sell it, let it out or stop living in it before the ten years are up, you have 30 days to tell the Tax Department and must repay the difference between 5% and 19% in proportion to the years remaining. Four years of occupation means handing back 60% of the benefit.
Older, more generous rules still exist for some buyers. The pre-2023 regime, 5% on the first 200 m² with no value cap at all, survives as transitional relief for those whose planning permits were issued or applications filed by 31 October 2023. Parliament extended that window on 17 April 2026, gazetted a week later, so it now runs to 31 December 2026. From 1 January 2027 everyone sits under the 2023 framework.
Property: 19%, 5%, or nothing at all
Buy a new home from a developer and VAT applies. Buy a resale property and it does not, because a second-hand building is an exempt supply. That distinction drives the whole cost comparison for buyers, because transfer fees at the Department of Lands and Surveys work in the opposite direction: no transfer fees at all where VAT has been charged, and a 50% reduction where it has not, cutting the 3%, 5% and 8% bands to 1.5%, 2.5% and 4%. A new build carries VAT and no transfer fee; a resale carries a halved transfer fee and no VAT. Our guide to buying property in Cyprus sets the rest of the purchase costs alongside it.
Land is its own trap. Since 2 January 2018 the sale of undeveloped building land in the course of business has carried 19% VAT. Agricultural land, land in environmental protection or archaeological zones and land outside town planning zones stay outside the charge. Land bought purely to build your own primary residence can qualify for the 5% rate on the same conditions as a finished home.
Leases split along similar lines. Renting out a home is exempt. Leasing commercial premises to a tenant who uses them for taxable business is subject to VAT, though the landlord can opt out once, and that election cannot be reversed.
What changes on 1 September 2026
Amendments to the Fifth and Eighth Schedules of the VAT Law, published in February 2026 as Κ.Δ.Π. 102/2026 and 103/2026, take effect on 1 September 2026 and change how a building stops being "new" for VAT purposes. The old test was a clock: broadly, a supply within five years of completion was taxable unless the building had already been in continuous use. The new test is about use. A supply before first occupation is taxable; after first occupation it is exempt.
The definitions carry the weight. First occupation means the first use of the building after its construction or delivery, whether that is the owner moving in, a tenant taking possession, or any other systematic use. First use means that systematic use has run for at least 18 months. A developer cannot park a friend in a flat for a fortnight and sell it on as an exempt second-hand property.
The same 18-month concept feeds the renovation rules. The reduced rate on renovating a private dwelling depends on the home counting as old, which now means at least three years have passed since first occupation, with the 18-month period running inside that. If you are buying something nearly new, or costing a refurbishment, the VAT position from September onwards may not be the one your builder quoted in the spring.
VAT is where property deals most often go wrong on price, because the difference between 5% and 19% on a €400,000 home is roughly the cost of the kitchen, the car and the legal fees combined. Get the classification confirmed in writing before the contract is signed, not after the Tax Department queries it.
Working out the VAT on a Cyprus purchase? Run the numbers with our transfer fee calculator and the wider 2026 tax rates, then have a tax and wealth or property lawyer from the directory confirm the rate before you commit. Figures here reflect the position in force in August 2026.