How the reduced 5% VAT works
- The home must be your main and permanent residence in Cyprus. Companies do not qualify.
- The home must be no larger than 190 m² and cost no more than €475,000; otherwise 19% applies to the whole price.
- 5% applies to the value of the first 130 m², up to €350,000. The rest is taxed at 19%.
- The home must stay your main residence for 10 years, or the difference can be claimed back.
Advisers differ on how the area between 131 and 190 m² is treated, and transitional rules apply to older applications (reported as extended to 31 December 2026). Treat this as an estimate and confirm with your lawyer or the Tax Department.
Frequently asked questions
Who qualifies for 5% VAT on a home in Cyprus?
An individual buying or building a home that will be their main and permanent residence in Cyprus, if the home is up to 190 m² and up to €475,000. Companies do not qualify.
How much VAT do I pay with the reduced rate?
5% on the value of the first 130 m², up to €350,000, and 19% on the rest. A €300,000, 120 m² home pays about €15,000 instead of €57,000.
What if the home is bigger than 190 m²?
Then the reduced rate does not apply and the whole price is taxed at 19%.
Do I need to keep the home for a number of years?
Yes. The home must remain your main residence for 10 years; selling or renting it out earlier can trigger repayment of the VAT difference.
Sources: Mondaq – 5% VAT on primary residences 2026 · Mondaq – transitional relief to 31 December 2026 · Cyprus Tax Department. Last checked 14 November 2026.