The reduced rate of 5% VAT applies to the first time purchase or building of a permanent residence (home). The property must be currently used as the permanent home (not holiday house), or it must be intended for use as the permanent/main residence for the purchaser and his/her family.

The following criteria have to be met in order to qualify for this reduction:

a) Purchaser must be 18 years of age or older.

b) Purchaser must be a citizen of Cyprus or the E.U.

c) The purchaser should be permanently residing in Cyprus, or have the intention to permanently reside in Cyprus, with the purchased property being intended for use as the main home/residence for 10 years.

If approved, only 200 sq. metres will qualify for the discounted VAT and the total residence should be no larger than 275 sq. metres.

So, if you are a first time purchaser of a property intended to be your main residence for 10 years, and you meet the above criteria, an application form to reduce the VAT to 5% can be submitted to the VAT authority, stating your intention to live permanently in the property. It is not necessary to have obtained permanent residence status prior to submitting the form.