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CYPRUS REAL ESTATE | VAT UPDATE

New VAT Rules for Immovable Property Now in Force: What Property Stakeholders Need to Know

Important amendments to the Cyprus VAT framework applicable to immovable property came into effect on 1 September 2026, pursuant to Regulatory Administrative Acts K.D.P. 102/2026 and K.D.P. 103/2026.

The amendments revise the Fifth and Eighth Schedules to the Value Added Tax Law and introduce a more precise statutory framework concerning the concepts of “first occupation” and “first use” of buildings.

Under the new framework, “first occupation” means the first use of a building following its delivery or construction, including owner-occupation, own use, leasing or any other use continuing on a systematic basis. “First use” means the systematic use or exploitation of the building following its delivery or construction for a period of at least 18 months.

These concepts are particularly relevant to the VAT treatment of supplies of buildings under the Eighth Schedule. The amendments therefore require greater attention to the actual use and occupation of a property, rather than treating the date of construction or completion in isolation, when assessing the VAT implications of a transaction.

K.D.P. 102/2026 also introduces corresponding amendments concerning qualifying renovation works to private residences. For these purposes, a private residence is regarded as “old” where at least three years have elapsed from its first occupation, with the 18-month period relevant to “first use” running concurrently with that three-year period.

The new framework may therefore have practical implications for developers, investors, property owners, purchasers and sellers, both when structuring transactions involving newly constructed or recently completed buildings and when considering qualifying renovation works.

Parties contemplating a property transaction should assess the property’s history, actual use and occupation at an early stage and consider the applicable VAT treatment as part of the legal and tax due diligence process.

The new rules have been in effect since 1 September 2026.

Mylonas Law advises developers, investors, businesses and private clients on real estate acquisitions, disposals, development projects and related corporate and commercial matters in Cyprus.

This publication is intended for general information purposes only and does not constitute legal or tax advice.