30.05.2023
The European Commission disagreed with Parliament’s compromise proposal to cut VAT on homes, MPs said on the House Finance Committee on Monday, amid a deadline approaching just over a week away.
Speaking to MPs during the House Finance Committee, Permanent Secretary to the Treasury Secretary George Panteli told MPs the EU Commission was not convinced that the latest proposal targeted social elements.
Deputies previously proposed not to set a minimum threshold for property area, and the commission returned to setting a limit of 110 square meters.
Since Brussels has already initiated legal proceedings on the case of violation of the rights of Cyprus, but has not yet issued a reasoned opinion, MPs have until June 8 to pass the bill into law.
Chairman of the committee and MP Diko Christiana Erotokritou told MPs they had two options: either go back to the original bill presented by the government, or prepare a different formula based on discussions with the commission’s tax office.
MPs will hold an extraordinary meeting on Thursday to discuss this in more detail.
Last week, the House Finance Committee agreed to a deal to eliminate the distinction between apartments and houses, as well as to introduce a reduced VAT of five percent on the first 190 square meters for properties up to 350,000 euros.
They also agreed that properties up to 475,000 euros and up to 190 square meters will have reduced VAT on the first 350,000 euros, while the remaining 125,000 euros will be subject to VAT at a rate of 19%.
According to Panteli , the EU Commission has come to the conclusion that the threshold should be 110 square meters – as opposed to the parliamentary proposal of 190 square meters.
“Whether in its original form, in the form in which the project was submitted, or with any amendments, it must be submitted to the plenum on June 8, the date will not change,” Erotokritou said .
Panteli also clarified that the commission intends to send a second letter to Cyprus in June, giving it two months to present legal arguments in connection with the infringement proceedings. The next step is to apply to the EU court by September or October.
Erotokritou said they are working hard to end proceedings against Cyprus paying for the “sins of the past” and to create a legal framework that covers as many middle-class citizens as possible, as well as young couples vying for a first home.
