Filenews 30 November 2022
More than 270 people who benefited from the reduced rate of 5% VAT for primary residence purposes have been found not to be eligible, after checks carried out nationwide by the Tax Department, and will have to be charged 19% VAT, which totals €16.2 million announced on Wednesday the Minister of Finance, Konstantinos Petrides, after the meeting of the Council of Ministers. It announced on-the-spot checks on other categories of taxpayers and types of taxes.
According to Mr. Petrides, since the beginning of October 2022, the Tax Department has been conducting a Pancyprian compliance campaign with on-the-spot checks on houses and apartments to verify the correct application of the reduced VAT rate for primary residence purposes. The campaign is being conducted in the afternoons and weekends, he said.
He noted that the reduced rate, according to the existing legislative framework, should only be applied for owner-occupied housing purposes and not for renting or other commercial exploitation.
In less than two months, he added, more than 1,700 on-the-spot checks have been carried out, during which, of the approximately 800 people identified, 275 revealed that they were not eligible applicants, and therefore 19% VAT should be imposed on them.
The corresponding amount of additional VAT that will be charged today amounts to €16.2 million said the Minister of Finance, adding that it is "something that vindicates us for the controls and leaves us very satisfied, but also demonstrates an abuse of the 5% system".
Mr. Petridis thanked the Tax Commissioner and the officers of the department for the effort they are making and said that not only will these audits continue in 2023 and in the coming period, but on-the-spot checks will also begin on other categories of taxpayers and types of taxes.
