09.06.2023
The plenary session of the Cypriot Parliament on Thursday almost unanimously adopted a law allowing a reduced VAT rate of 5% to be applied to the first 130 sqm. m of basic housing, including both houses and apartments. The measure was supported by 42 deputies with one abstention.
In particular, a reduced VAT rate of 5% will apply to the first 130 sq. housing not exceeding 190 sq.m.
The draft law also includes a provision allowing a reduced VAT rate of 5% to be applied to the first 190 sq.m. landscaped area for people with disabilities.
There is also a transitional period during which the proposed rules will not apply in cases where a town planning permit is obtained or an application for such a permit is submitted within four months from the date of entry into force of the law.
In the course of lengthy debates at the plenary session, despite the consensus on the adoption of this particular law, disagreements arose between the parties regarding liability on the causes and actions, which led to a change in legislation, which previously allowed a reduced VAT rate of 5% for the first 200 sq. m. m. residential building.
The European Commission opened a case of violation of the rights of Cyprus on this issue, stating that it was not implemented as a social policy measure.
Despite another proposal put forward by the Ministry of Finance, which provided for a reduced VAT rate for the first 110 sq.m. and received the approval of the European Commission, Finance Minister Makis Keravnos informed Parliament that he would respect and support the proposal to be voted on by Parliament.
