Buying your first property in Cyprus can come with significant financial benefits — especially for residents and those relocating long-term. The First Residence VAT Reduction Scheme offers a substantial tax advantage for eligible buyers.
Key Benefit: Reduced VAT Rate
- Normally, new properties in Cyprus are subject to 19% VAT.
- However, for first-time or primary residence buyers, the VAT is reduced to 5% on the first 130 m² of the property — provided it will be used as a permanent home.
Who Qualifies for the 5% VAT?
- You are 18 years or older.
- You are purchasing your first home in Cyprus (or you haven’t used the VAT benefit before).
- The property will be used as your main and permanent residence for at least 10 years.
- You have not rented out or used another property with the same VAT reduction.
- Both EU and non-EU nationals can qualify, including those applying for permanent residency.
Important Limits:
- The 5% VAT applies only to the first 130 square meters of the property’s internal area.
- For any square meters above 130 m², the standard 19% VAT rate applies.
- The maximum size limit for eligibility is 190 m² — if the property exceeds this, the entire purchase may be taxed at 19%.
Example:
If you buy a 150 m² villa:
- First 130 m² → taxed at 5%
- Remaining 20 m² → taxed at 19%
What If You Sell Before 10 Years?
If you sell the property before the 10-year period ends, and don’t buy a new primary residence, you may have to repay part of the VAT benefit received.
How Aurea Properties Supports Buyers
We ensure our clients are fully informed before purchase and assist with:
- Eligibility assessment
- Application for VAT reduction
- Legal review and property compliance
- Coordination with tax authorities