On 8 June, 2023 the Parliament of Cyprus passed a law allowing for a reduced VAT rate of 5% imposed on first homes.
The VAT reduced from 19% to 5% will apply to the first 130 sq.m of a first home and up to a value of €350,000, provided that the total value of the transaction does not exceed €475,000 and that the total buildable area does not exceed 190 sq.m.
The law also includes the clause stating that, in the case of residences belonging to individuals with disabilities, the discounted VAT will apply to the first 190 sq.m of the buildable area.
The law also provides for a transitional period, so that the new rules do not apply in cases where a town planning permit has been issued or where an application for a town planning permit has been filed within four months from the effective date of the law.
