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Government urged to challenge EC’s ruling on property VAT

Government urged to challenge EC’s ruling on property VAT


The Ministry of Finance will collect more data as part of its bid to convince the European Commission to agree to the republic’s proposal to continue the agreement to reduce VAT on the first residence.

Cyprus has been in dispute with the Commission over a VAT rebate it is offering for the purchase of a primary residence and a breach procedure was launched last July that could result in a fine imposed on Cyprus by the European Court of Justice.

Under the current scheme, the buyer pays 5% VAT on the first 200 square meters of a house or apartment with a total area of ​​275 square meters. The commission wants a 5 percent discount to apply to the first 140 square meters of a 200 square meter residential building.

Speaking after the matter was debated by the House Finance Committee on Monday, House President Cristiana Erotokritou said the Commission rejected Cyprus’ proposal, insisting that its terms be accepted.

The committee, according to Erotokritou, asked the Ministry of Finance to collect more data to strengthen the position of Cyprus and challenge Eurostat’s findings that the average living area is 140 square meters, which does not reflect the living conditions in Cyprus. She also said the measure should be tied to the total cost of the first residence.

The government has submitted a bill in line with the Commission’s directive, but most parties oppose it, insisting that the original agreement remain in place.Dipa MP Alekos Trifonides also lamented that the Commission was pushing for a transitional period for a lower VAT that would have a specific expiration date.

Trifonides said Deepa was opposed to the government’s bill, but “will wait for the completion of new consultations between the finance ministry and the European Commission’s VAT committee before finalizing our position.”

Deputy Greens Stavros Papadouris said “a small positive step would be to secure a transitional period” while “a big negative” would be that the Commission did not share Cyprus’ concerns.

The Technical Chamber (Etek) also agreed with the parties. Etek President Constandinos Constanti said the government should document its position with the Commission because if the Commission’s proposal for 140-200 square meters is approved, it will be “a blow to the dreams of many young couples to buy their own home.”

An entire generation will be called upon to pay the price for the mistakes of the older generation, Constanti said.

Source and photo:, Editor

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