The Parliament’s Finance Committee has begun discussing a bill proposed by MP Stavros Papadouris. The initiative concerns extending the deadline for filing applications for the reduced 5% VAT rate on residential property purchases. It proposes increasing the transition period from three to four years, as the current deadline expires in mid-June 2026.
Statistics and current situation
According to the Tax Department, through the Tax system For All » 8,987 applications for construction permits applying the reduced 5% VAT rate (for the first 200 square meters) were submitted. Of these, 2,949 certificates for the reduced rate were issued between June and October 2023.
Agency representatives noted that all cases have currently been transferred to the jurisdiction of district self-government organizations (DSOs). Delays in these organizations’ work in each individual district have become one of the main arguments in favor of extending the deadlines. Developers and buyers of one-, two- , and three-bedroom properties are facing a system that is unable to process applications on time.
Positions of the parties and possible risks
The Association of Developers expressed support for the bill, emphasizing that citizens should not suffer financial losses due to administrative inefficiencies in the districts. Meanwhile, the Ministry of Finance and the Legal Service expressed concern. The main concerns center on the potential reaction of the European Commission, as any changes to VAT regulations must comply with EU directives.
Committee Chairperson Christiana E Ó Tokritou noted that the proposal is “correct and useful” as it aims to help people. However, she called for further study of the issue and contact with the VAT Committee in Brussels to ensure the legitimacy of such an extension.
Criteria and social focus
During the discussion, it was emphasized that the new rules should not become a loophole for buyers of luxury residential properties. Member of Parliament Andreas Kavkalias insisted that the regulations be aimed exclusively at those whose applications for one-, two-, and three-bedroom homes were stuck in departmental bureaucratic processes.
Stavros Papadouris added that the current situation is paradoxical, as the EAO mechanisms in the districts are not fully operational , and taxpayers should not have to pay for the shortcomings of the state system.
In addition to residential property taxation, the committee considered the possibility of waiving standard procedures for desalination projects implemented this year. The goal is to ensure sufficient water resources without the need for lengthy feasibility studies. Discussion of this topic will continue until the end of March.
