It applies to all European and third-country nationals (over 18+).
The terms under which a purchaser is entitled to a 5% VAT rate are as follows:
(a) The Property is under construction or completed and subjected to VAT (All buildings for which the town planning application was submitted on or after the 1/5/2004 are subjected to VAT).
(b) The Property is designated to be used as the residence of the buyer in Cyprus.
(c) The Property bought has not been used before.
(d) It must be intended to be used (in the case of property under construction) as the main and permanent place of residence of the buyer in the Republic (the buyer is not required to make Cyprus his/her permanent residence, but only to use the property as permanent space of residence, when in Cyprus).
(e) The VAT reduction applies only to the first 200 sq.m. of houses.
(f) The applicant must not have any other property as permanent residence in Cyprus.
Applicant must submit an application and attach among others the following:
i. Contract of Sale in case or purchase or a Contractors Contract in case of building a house (in the latter case a declaration by the building contractor is submitted that he is licensed to build the house).
ii. Proof of ongoing construction in case of building a house
iii. Architectural plans
iv. Proof that the applicant is using the house as a place of residence such as various bills. In the case of houses under construction, the bills or other proof of use must be presented within 6 months from the date of possession of the house.
v. Any other supporting evidence requested in the relevant form.
A copy of the application/approval certified by the Authority to which it was submitted, is delivered to the seller or the building contractor, as the case may be, who is obliged to apply thereon the reduced VAT of 5%.
In any case that it is subsequently revealed that the applicant was not entitled to a reduced VAT, such person must pay the full amount of VAT.
In any case that the entitled person ceases to use the property as a place of residence at any date before the completion of a 10 year period, such person must within 30 days from such date inform the VAT Director and to pay the amount of VAT corresponding to the part of the 10 years period during which the house was not used as the place of residence.
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