Filenews 15 May 2024 - by Eleftheria Paizanou
Some people come up with various ways to deceive the Department of Town Planning and the Department of Taxation and take advantage of the reduced VAT rate when buying or building a main residence / apartment, after the implementation of the new legal framework.
Due to the reduction in the area of the property that can be considered eligible, some are trying to diversify their existing development plans. Specifically, the new framework provides for the imposition of only 5% VAT for houses or apartments up to 130 square meters (sq.m) of buildable area, worth up to €350,000. A basic requirement is that the property does not exceed 190 sqm and €475 thousand as a maximum price. For these cases, i.e. for houses and apartments with an area of more than 190 sq.m. and with a value of more than €475,000, 19% VAT will be charged from the first square meter and from the first cent.
According to information provided by "F", some who have already obtained relevant permits under the previous (more relaxed) legislation, are now changing the plans for the building they applied for. This is in order to cover more properties with the 5% provided for by the new legislation, through which the area of the eligible property has been reduced while the value of the premises has been included as a criterion.
A competent source told "F" that someone who had secured a building permit a few months ago for two houses, with a total emergency of 250 sq.m., diversified the plans by converting the two houses into three, smaller ones, and adding swimming pools to them! Also, as we have been told, there was a case of a taxpayer who, while initially buying two apartments under the previous regime, changed the plans, turning the two properties into a large floor apartment, the area of which was much larger than that provided for in the new framework. Both cases were dismissed.
A source said some had tried to fool the authorities, who he said rejected applications when they detected large discrepancies in the plans.
The restrictions included in the new legal framework were intended for the legislation to comply to some extent with the relevant European Directive, according to which 5% VAT should be levied only for social purposes. The new legislation entered into force last July, but the transitional provisions expired at the end of October. The transitional provisions provided that those cases that had obtained planning permission or applied for planning permission by October 31, 2024, would benefit from 5% VAT under the old regime. Applicants who have already applied for planning permission under the previous legal framework and will secure it along the way will have until 2026 to complete the procedures and submit a relevant certificate to the Tax Department to pay 5% VAT under the old legislation.
