Filenews 22 January 2024 - by Eleftheria Paizanou
Without any change to the legislative framework approved last summer by Parliament and which entered into force on 1 November, the Commission agreed to the new legislation.
The European Commission agreed with the new framework, as it was deemed to be in line with the social objective of the European Directive.
The announcement for the approval by the European Commission was made by Finance Minister Makis Keravnos in his statements to the media today. According to Keravnos, after the legislation was approved by Parliament, the Ministry of Finance approached the EU for its own consent. As he said, huge efforts were made by the Cypriot authorities, stressing that after many explanations and arguments, the EU accepted the change of legislation as approved by Parliament. As the minister said, the issue was settled in the way the parties had agreed.
As of November 1st, according to the new legislation, 5% VAT (instead of 19%) is imposed on the first 130 square meters (sq.m.) of a first residence/apartment, with a value of up to €350,000.
For houses and apartments with an area of 131 sq.m. up to 190 sq.m. and with a value of up to €475,000 19% VAT is charged. That is, for the first 130 sq.m. and for a value of €350,000 VAT will be 5%, while for the remaining 60 sq.m. up to 190 sq.m. VAT will increase to 19%. For houses and apartments with an area of more than 190 sq.m. and with a value over €475,000 19% VAT will be charged from the first square and first cent.
It is recalled that the European authorities initially required Cyprus to apply the 5% VAT measure only to 110 sq.m. of a house.
