Nicosia, Cyprus. The House on Thursday passed legislation extending the period during which first-home permit applicants may qualify for discounted VAT. The extension applies to applicants covered by transitional rules introduced in 2023.
Extension of transitional VAT rules
Three years ago, regulations allowed people who applied for a permit for their first home between June and the end of October 2023 to qualify for a 5 per cent VAT rate, regardless of the construction date of the property.
The transitional period had been due to expire at the end of June 2026, meaning eligibility for the reduced VAT depended on the permit application being processed by then.
With the law passed on Thursday, the permit examination period, and thus eligibility for discounted VAT, has been extended to the end of this year.
Bill fast-tracked and reasons cited
The bill, tabled by Greens MP Stavros Papadouris, was fast-tracked to the plenum.
MPs who voted in favour said the extension was necessary due to delays in processing permit applications by the district self-government organisations, or EOA.
The EOA assumed responsibility for these permits following the reform of local government in 2024.
Positions of parties and MPs
On the House floor, Diko MP Christiana Erotokritou said the measure was intended to “avoid penalising home buyers for the delays of town planning authorities”.
Akel voted against the bill, with Giorgos Loukaides saying: “We must not allow those building sprawling buildings to benefit from reduced VAT”.
Scope of the reduced VAT rate
Applicants in the relevant time period would benefit from the reduced VAT rate of 5 per cent on the first 200 square metres of the residence, regardless of the total surface area.
How do you think permit-processing delays should be addressed while keeping VAT relief targeted to first-home buyers?
