06.12.2022
More than 270 people, mostly foreign investors, who wished to obtain a Cypriot passport, benefited from a reduced VAT rate of 5% for first time buyers instead of the standard rate of 19%, while the state treasury waived taxes in the amount of 16.2 million euros. This was announced by the Minister of Finance Konstantinos Petrides , who stated that the state intended to collect the taxes due.
He said 275 cases had been identified following evidence gathered during field checks earlier this year. Since the beginning of October, the Tax Service has been conducting field inspections of houses and apartments to determine whether the owners live in them or rent them out. He said inspections revealed that 275 homeowners were not eligible for the 5% reduction and therefore should be subject to VAT at the rate of 19%. In less than two months, more than 1,700 field inspections were carried out.
Petrides expressed satisfaction with the results of the inspections, noting that the money due would be collected. “However, it also shows the abuse of the 5% VAT scheme. Mostly foreign investors who have bought an apartment or house have taken advantage of the legislation at a reduced 5% VAT rate, but are permanently residing abroad and renting out property through the Airbnb platform . In addition, Cypriots living in Nicosia or another city have bought a country house in a coastal town, declaring it their main residence, but which they rent out to third parties,” Petrides said .
He promised that checks would continue, and they would begin in relation to other categories of taxpayers.
