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Extension of Reduced VAT Rate for Homes Discussed by Finance Committee

Published March 2, 2026, 17:11
Extension of Reduced VAT Rate for Homes Discussed by Finance Committee

The House Finance Committee discussed a bill proposing an extension of the deadline for applying for the reduced 5% VAT rate on homes, from three to four years. The proposal was submitted by MP Stavros Papadouris of the Ecologists Movement-Citizens' Cooperation, due to delays in licensing. According to the Tax Department, 8987 applications have been submitted for the 5% rate for the first 200 sq.m., with 2949 certificates issued. The Legal Service expressed disagreement with the proposal, while the Cyprus Real Estate Development Association supported it due to delays in licensing by the Building Authority. The Committee President, Christiana Erotokritou, expressed reservations and proposed further study, possibly including contact with the European Commission, to determine the feasibility of such an extension. MP Andreas Kavkalias of AKEL suggested discussing the criteria for applying the reduced rate to avoid loopholes for luxury homes. Stavros Papadouris emphasized that the delay is due to the system's inadequacy, not the citizens. The possibility of a derogation for desalination projects, aimed at addressing water supply, was also discussed. The issue will be discussed again in a future session. The Ministry of Finance stated that the extension could create new challenges.

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