The European Commission has given the nod to the levying of the reduced 5 per cent VAT on first homes in Cyprus, the finance minister revealed on Monday.

Makis Keravnos made the remarks to journalists coming out of a courtesy meeting with the new leadership of the Chamber of Commerce and Industry.

He said the European Commission’s Directorate-General for Competition agreed to the reduced VAT scheme thanks to the “tireless efforts” of the finance ministry.

According to the minister, Brussels has taken on board the reduced VAT scheme exactly as it was passed by parliament last June.

The discounted VAT (the full rate is 19 per cent) applies to the first 130 square metres of a first home – for single dwellings and apartments alike – 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 surpass 190 square metres.

Another clause provides that, for persons with a disability, the discounted VAT will apply to the first 190 square metres of the buildable area.

The law also provided 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 of the entry into force of the law.

Credit: Elias Hazou @ Cyprus Property News 24.1.24