VAT on property in Cyprus

When acquiring a new property in Cyprus, it is important to note that it is subject to Value Added Tax (VAT).

However, if the property is a resale (secondary market) or if its planning permit was issued before May 1st, 2004, it is exempt from VAT and instead subjected to a different tax known as the Transfer Fee.

In this article, we will discuss both VAT on property and Transfer Fees in Cyprus using simple examples.

Valued Added Tax on Property (19% and 5%)

The standard VAT on property in Cyprus is 19%.

However, under Cypriot law, a reduced rate of 5% can be applied to real estate purchases if specific conditions are met. This provision allows buyers of new properties to potentially save a considerable amount.

Reduced VAT of 5% - Conditions for Eligibility

  • To qualify for the reduced VAT rate, the following criteria must be satisfied:
  • The buyer must be an individual (not a legal entity, i.e. company) aged 18 or older.
  • The property must be intended as the buyer's primary residence in Cyprus. Practically, this can be also a holiday home.
  • The buyer must not have previously purchased property in Cyprus under the reduced VAT rate.
  • The property must be for personal use only, not for profit such as renting (short-term, long-term or Airbnb).
  • At the time of applying for the reduced VAT rate, the property must not be occupied or in use.
  • The reduced 5% rate applies to the first €350,000 of the property value, provided the total value does not exceed €475,000. Additionally, it applies to the first 130 square meters of the property's area, with the total area not exceeding 190 square meters.


  • A studio with an area of 55 sq.m. and a price of €125,000 will have a VAT rate of 5%.
  • A villa with an area of 300 sq.m., regardless of the price, will have a VAT rate of 19%.
  • A villa with value of €600,000, regardless of the area, will have a VAT rate of 19%.
  • An apartment with an area of 125 sq.m. and a price of €450,000 will have €350,000 taxed at 5% VAT, and the remaining €100,000 at 19% VAT.
  • Let’s consider a more complicated example. Assume a villa with an area of 160 sq.m. and a price of €475,000 (i.e., the maximum eligible for the reduced tax). In this case, the value subject to the reduced tax is calculated as follows: €475,000 x (130/160) x (350/475) = €284,375. The remaining amount of €475,000 – €284,375 is subject to the standard VAT rate of 19%.

New regulation of 2023 on VAT property Tax

These price and area regulations do not apply to buildings with a planning permit obtained or applied for by 31/10/2023, provided that the application for the 5% VAT rate is submitted within three years from the date of the new law (by June 15, 2026).

In such cases, a different rule applies: a reduced rate of 5% is applicable to the first 200 sq.m. of the property, regardless of its total price and area.

It is evident that in the coming years, this alternative rule, which is advantageous for real estate buyers, will commonly apply.

What happens if you decide to sell the house earlier than 10 years?

If an applicant who has been granted the reduced VAT rate stops using the property as their primary residence in Cyprus within 10 years of possession (e.g., through sale or rental), they must inform the VAT Department within 30 days and pay the proportional difference between the reduced and standard VAT rates.

For example, if an eligible person buys an apartment for €300,000 + 5% VAT and sells it after 5 years, they must pay the 14% VAT difference for the remaining 7 years:

  • €300,000 x 5% = €15,000 (initial VAT paid)
  • €300,000 x 19% = €57,000 (full VAT rate)
  • €57,000 – €15,000 = €42,000 (total savings)
  • €42,000 x 5/10 = €21,000 (amount to be reimbursed to the tax authorities if the property is sold after 5 years).

Transfer Fees 

Properties not subject to VAT must pay Transfer Fees according to the following scales:

Transfer Fees in Cyprus  
Property Value  Rate (%)
 < €85,000 1.5%
€85,000 - €170,000 2.5%
> €170,000 4%

Transfer Fees do not apply to properties subject to VAT (i.e., new properties); they only apply to the purchase of resale properties.

Consider this example: If someone purchases a property valued at €600,000, the Transfer Fee would be calculated as follows:

€85,000 x 1.5% + €85,000 x 2.5% + €430,000 x 4% = €20,600

Stamp Duties

Upon signing the sales agreement, it must be submitted to the Land District Office, where Stamp Duty is paid.

Stamp Duties are a state fee payable when purchasing property, due as a lump sum within thirty days of signing the property acquisition contract.

The Stamp Duty rate is calculated according to the following scales:  

Stamp Duty in Cyprus   
Scales  Rates
< €5,000 0%
€5,001 - €170,000 0.15%
> €170,000 0.2%

For example, if a property is purchased for €750,000, the Stamp Duties would be calculated as follows:

€5,000 x 0% + €165,000 x 0.15% + €580,000 x 0.2% = €1407.5