EU pressures Cyprus on VAT for domestic trade

Cyprus is facing a major challenge regarding the 5% value added tax rate for new home owners. The European Commission has issued a final warning to Nicosia to pass a bill regulating the issue, which has been dragging on since 2020. New Finance Minister Makis Keravnos confirmed that Cyprus has exceeded the European Commission's deadline to resolve the issue and risks sanctions if the problem is not resolved. The last warning was issued in December, and the minister has directed that the bill be prioritized for approval.

Till now, there was no limit on the area developed by citizens and the reduced VAT rate of 5% applied to the first 200 square meters. However, with the new bill, the Commission wants the low VAT rate of 5% to apply to residential houses up to 220 square meters. m, with 5% applied to the first 170 sq. ft. m, but for the remaining area up to 220 sq.

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