The December extension covers planning-authority delays
Some projects delayed by the planning authorities can still use the transitional 5% VAT route until 31 December 2026.
Law 109(I)/2026 was issued by publication in the Official Gazette. According to Legal 500, the Cyprus Tax Department issued an announcement on 4 May 2026, and the clarification of the transitional provisions is made pursuant to the amendment.
The continuing 5% rate has area and value limits
According to KPMG, the 2023 amendment applies the 5% rate to the first 130 m² of buildable residential area. According to Legal 200, the preserved pre-2023 treatment applies 5% VAT to the first 200 m², without an overall floor-area or property-value cap.
The continuing regime has separate limits. The table sets out KPMG’s area and value limits under Law 42(I)/2023, which must be met together.
| Condition | Limit |
|---|---|
| Buildable residential area eligible for the reduced rate | 130 m2 |
| Maximum value covered by the reduced rate | €350,000 |
| Maximum total buildable area | 190 m2 |
| Maximum total transaction value | €475,000 |
The value ceiling for the reduced-rate portion is distinct from the ceiling for the total transaction.
The route depends on when the permits were obtained
UK and other foreign nationals are not excluded: the Tax Department’s FAQ covers natural persons who are citizens of any state. Applicants must be at least 18 when submitting the declaration and declare the home as their main and permanent residence in Cyprus.
Article 63 is a transitional provision for cases where a planning permit has been secured or an application for a planning permit was submitted by 31 October 2023. The Tax Department’s announcement distinguishes these permit histories.
| Case | Planning permit or application cut-off | Building permit timing | Relevant date | What the relevant date controls |
|---|---|---|---|---|
| Earlier building permit | 31 October 2023 | by 31 December 2024 | 15 June 2026 | Declaration submission deadline |
| Later building permit | 31 October 2023 | after 1 January 2025 | 31 December 2026 | Examination horizon where planning-authority delay prevented timely examination |
| Building permit still unissued at year end | 31 October 2023 | 31 December 2026 | 31 December 2026 | Examination horizon where planning-authority delay prevented timely examination |
For the earlier building-permit branch, where the planning permit application was submitted by 31 October 2023 and the building permit was issued by 31 December 2024, the announcement required the declaration to be submitted to the Commissioner by 15 June 2026 for the reduced rate to apply on the first 200 square metres of buildable area; that date has now passed. The later branch specifies “after 1 January 2025” and includes the specified still-unissued building permits. Separately, the law allows the Commissioner to examine, until 31 December 2026, applications whose examination was not completed in time because of delay by the planning authorities.
Why a complete declaration depends on the permit history
Assemble the permit history before relying on the extension. The following records are practical evidence to gather, not a statutory checklist.
- Obtain the planning application acknowledgement and building-permit history from the developer or authority, including application dates and any permit issued.
- Collect correspondence recording the authority’s delay. Add any pending reduced-rate application and submission acknowledgement.
- For the applicable branch above, submit the duly completed Responsible Declaration only through Tax For All (TFA). For an existing submission, check its status and completeness against the relevant deadline above.
- Reconcile the approval position, invoices and payments before assuming reduced-rate treatment or recovery of VAT already paid.
A Cyprus-licensed tax adviser must confirm whether the delay qualifies as planning-authority delay and whether the records satisfy the Tax Department. Recovery of standard-rate VAT already paid depends on the contract, invoices and application position reviewed by the same adviser.
Send us your planning application date, building permit, delay evidence and TFA status to assess your VAT deadline. We coordinate licensed Cyprus professionals, who do the regulated work.
Frequently asked questions
Where do I collect the reduced VAT certificate after approval?
Can the developer charge reduced VAT before approval?
Do both spouses need Cyprus tax identification numbers?
Sources (7)
- Ο περί Φόρου Προστιθέμενης Αξίας (Τροποποιητικός) Νόμος του 2026, Ν. 109(Ι)/2026 (in Greek)
- Εξέταση Υπεύθυνων Δηλώσεων για την Επιβολή Μειωμένου Συντελεστή ΦΠΑ (5%) για την Αγορά ή Ανέγερση Κατοικίας από τον Έφορο Φορολογίας… (in Greek)
- Υποβολή Υπεύθυνης Δήλωσης για επιβολή Μειωμένου Συντελεστή ΦΠΑ στην Αγορά / Ανέγερση Κατοικίας και έκδοση πιστοποιητικού Μειωμένου… (in Greek)
- Συχνές Ερωτήσεις για τον Μειωμένο Συντελεστή Φ.Π.Α. 5%, Τμήμα Φορολογίας (in Greek)
- Reduced VAT Rate
- Cyprus Vat On First Homes: Legislative Reform And Extension Of Transitional Relief To 31 December 2026 | Legal 500
- VAT Update, Reduced VAT Rate | Legal 500
This guide explains the rules as they stand on the date above. It is general information, not legal or tax advice. A licensed Cyprus professional, whom we can connect you with, confirms how the rules apply to you and handles any filing or registration.
