Since Cyprus’ accession to the EU, VAT is charged on all new property provided the initial application for a building permit was made after the 1/05/2004.  All buildings that received the building permit prior to this date will have no VAT charge.  Also all second-hand property including houses, apartments etc, have no VAT charge.  Building plots/land are also exempt from VAT. 

Special regulations which will treat the purchase/ building of a permanent residence to a lower VAT charge (5%) apply.

According to VAT Law, the reduced VAT rate of 5% is given to eligible persons for the construction or purchase of a new dwelling or flat, used as the main and primary place of residence under certain criteria. The said criteria can be summarised as follows:

1) The dwelling is intended to be used or it is used by the entitled person as his main place of residence. 
2) An ‘eligible person’, according to the above mentioned Law was considered to be a person who is over 18 years old and he/she being a citizen of the Republic of Cyprus or a citizen of any other European member country, who is permanently residing in Cyprus.