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VAT return for the first property purchase in Cyprus

On the 8th of June, 2012, the law of the Republic of Cyprus #73(I)/2012 entered into force, amending the VAT Law of 2000.
Under the new law, from now on at the property purchase not only the citizens of the Republic of Cyprus or the EU, but also third country nationals will be charged a reduced rate of VAT of 5% instead of the current rate of 18%. Thus, the buyer is provided with an opportunity to substantially save money when buying property in Cyprus.

Requirements for the property and the applicant
Reduced rate of VAT is granted subject to the following requirements:
1. The applicant must be a natural person (not legal entity)
2. The applicant (the property purchaser) must be at least 18 years of age
3. This property must be the primary residence of the applicant in the Republic of Cyprus. A property in this context can be a house or an apartment, as well as cases where the buyer is building a house.
4. The applicant should not have another property in Cyprus, acquired earlier with a reduced rate of VAT
5. The property must be used exclusively as a residential property, and the applicant must be the first to come into actual possession of the rights for the property from the time of completion.

The law applies to the first 200 sq.m. of residential property, provided that the total area of the property does not exceed 275 sq.m., according to the architectural plans filed with the official authorities of the Republic of Cyprus at construction. Thus, if the total area of the property is, say, 300 sq.m/, the reduced rate of VAT does not apply, and the buyer will have to pay the full VAT rate of 18% at purchase.
In addition to basic 275 sq.m. of living space in the layout of the property, there can be: a covered car park (but not more than 36 sq.m.), boiler room (but not more than 5 sq.m.), storage room (but not more than 7 sq.m.) and a covered veranda (but not more than 40 sq.m.).

Note:
The application is supposed to be submitted to the VAT Department BEFORE moving into the house and transferring all the bills to your name!

For more details and assistance you can contact one of our specialists.