02.11.2022
Since the beginning of October 2022, the Department of Taxation has been conducting a compliance campaign through on-site inspections in residences to determine whether the reduced VAT rate has been applied correctly. At the moment, the amounts due as a result of this check amount to 5 million 19 thousand 575 euros, Finance Minister Konstantinos Petridis said on Wednesday.
In statements following the Cabinet meeting, Mr. Petridis said the checks were aimed at establishing that the measure was not being abused and that the property was being used either for rental purposes. Or for other commercial purposes, when a rate of 5% was paid, while it should have been paid at 19%.
The Minister noted that field inspections are the only way to check. In the last month, 649 such field visits were carried out in all cities: 225 in Nicosia, 267 in Limassol, 50 in Larnaca, 82 in Famagusta and 25 in Paphos.
“In 308 cases, someone was found in the room, and in 341 no one was found, and where they were not found, most likely, checks will be carried out again,” he said.
He further explained that the tenant was found in 67 cases, which, in essence, means a violation of “that the house is not used as a property or as a first residence, and the VAT must be returned to the state, and that until now the fees for this check amount to 5 million 19 thousand 575 euros.
These checks will continue on thousands of properties, both weekdays and weekends, he said.
The Ministry of Finance reported that in the period 2013-2022, about 36,000 applications for a reduction in the VAT rate of 5% on the construction or purchase of housing were considered and 32,000 were approved.
He recalled that Cypriots or foreigners who use the residence as a first residence and to live in a property are entitled to a reduced rate. When the building is used for commercial purposes or for rent or something else, the rate is 19%. He said those 32,000 applications concerned both Cypriots and naturalized foreigners, as well as other EU or third country nationals.
