Quick answer: Cyprus has extended the transitional 5% VAT regime on first homes to 31 December 2026 — but only in defined cases. Under the stricter post-2023 framework, the reduced 5% rate applies to the first 130 sqm of a primary residence, subject to limits of €350,000 in property value, 190 sqm in total area, and €475,000 in total transaction value. Breach any of those ceilings and the full 19% rate applies to the entire purchase. For some buyers the new deadline is December; for others the original 15 June 2026 cut-off still stands. Getting this wrong can change your final cost by tens of thousands of euros — so the square metres, the price, the permits, and the dates all need checking before you sign.
What exactly did Cyprus extend?
On 24 April 2026, Law 109(I)/2026 was published in the Official Gazette, extending the transitional provisions of the 2023 VAT reform to 31 December 2026.
The reason is administrative, not political. The local government reform transferred planning and building-permit powers to new provincial bodies, and the resulting delays threatened to push eligible buyers out of the relief window through no fault of their own. The state's position was simple: buyers and developers shouldn't pay for government bottlenecks.
So the Tax Commissioner can now examine applications under the old, more generous rules up to the end of 2026 — where the delay was caused by the planning authorities. That qualifier matters, and it's where most of the confusion lives.
Why does the 5% rate matter so much?
The standard VAT rate on a new-build in Cyprus is 19%. The reduced rate for a primary, permanent residence is 5% — and on a meaningful purchase, that fourteen-point gap is one of the largest single line items in the whole transaction.
On a €700,000 home, the difference between qualifying and not qualifying frequently lands in the €80,000–€100,000 range. That's not a rounding error. It's the deposit on another asset. It's why eligibility deserves the same scrutiny a buyer would give the price itself.
Which deadline applies to you — June or December?
This is the part to get right, because there are now two live deadlines running in parallel, and the extension did not collapse them into one.
The 31 December 2026 deadline broadly applies where:
- the planning permit application was submitted, or the permit issued, by 31 October 2023; and
- the building permit was issued after 1 January 2025, or has not yet been issued.
Where the building permit hasn't been issued yet, the 5% VAT application must be filed alongside the building permit application.
The original 15 June 2026 deadline still applies where the building permit was issued on or before 31 December 2024. The April amendment did not move this date. If your project sits in this bracket, the December extension is not yours to use.
In short: the extension is a safety net for projects stuck in the permit pipeline — not a blanket reprieve for everyone.
Old rules vs new rules: what's actually at stake
Buyers who qualify under the transitional ("old") regime get materially better terms:
- Old regime: 5% on the first 200 sqm of buildable area. No cap on total size. No cap on property value. 19% applies only to area above 200 sqm.
- New regime: 5% on the first 130 sqm, but only if value ≤ €350,000, total area ≤ 190 sqm, and total transaction value ≤ €475,000. Exceed any ceiling and 19% applies to the whole property.
For a larger or higher-value Limassol home — exactly the segment where most serious buyers are looking — the old rules can be worth a great deal more. That's the window now open until year-end for eligible projects.
One more date to watch: 1 September 2026
Separate from the deadline extension, the definition of "first occupation" changes from 1 September 2026. From that date, first occupation means systematic use of the building for at least 18 months. It's a technical shift, but it can affect whether a given property is treated as a first sale (VAT-able) or not — another reason to confirm a property's exact status rather than assume it.
What buyers should check before signing
Before committing to any new-build in Cyprus, confirm five things:
- The permits. When was the planning permit applied for or issued? When was the building permit issued? These dates decide which deadline — and which rate regime — applies to you.
- The square metres. Both the qualifying area and the total internal area. The 130 sqm, 190 sqm, and 200 sqm thresholds all turn on precise measurement.
- The value. Property value against the €350,000 limit and the €475,000 total transaction ceiling.
- Eligibility. The home must be your primary and permanent residence to claim 5% at all.
- New-build vs resale. VAT applies only to a first sale. Resale properties carry no VAT — sometimes the better route for buyers outside the reduced-rate criteria.
The bottom line for buyers
This extension is good news, but it's narrow. It buys time for a specific pool of projects caught in permit delays — and the size, value, and date conditions are unforgiving once you're inside the new framework. The difference between a clean 5% and a full 19% can be the price of a small apartment, and it's decided by paperwork most buyers never think to ask about.
At Cyprino, we review the contract, the planning permit, and the building permit on every property we represent, so you know exactly which VAT regime applies before you sign — not after. If you're weighing a purchase in Limassol and want certainty on the numbers, get in touch with our team or browse our current Limassol listings.
This article is for general information only and is not tax or legal advice. VAT eligibility depends on the specific facts of each transaction. Confirm your position with a qualified Cyprus tax professional before proceeding.