The Cyprus Tax Department has announced that the Tax Commissioner may examine Responsible Declarations for the application of the reduced VAT rate (5%) on residential purchases or construction until 31 December 2026, under transitional provisions linked to planning permit delays.
The Tax Department of the Republic of Cyprus has announced, on 4 May 2026, that the Tax Commissioner will continue examining applications for the reduced VAT rate on residential property under Article 63 until 31 December 2026, where delays by planning authorities prevented timely processing. The extension follows Amending Law No. 109(I)/2026, published in the Official Gazette on 24 April 2026.
Article 63 serves as a transitional provision covering cases where a planning permit was either secured or applied for by 31 October 2023. Under the updated framework, the Tax Commissioner will accept Responsible Declarations for the 5% reduced VAT rate where a planning permit application was submitted or approved by that date, provided that the corresponding building permit was issued after 1 January 2025 or remains unissued by 31 December 2026.
However, a stricter deadline applies to certain cases. Where a planning permit application was submitted by 31 October 2023 and a building permit was issued by 31 December 2024, Responsible Declarations must be submitted no later than 15 June 2026 for the reduced VAT rate to apply to the first 200 square meters of buildable area.
The Tax Department also reiterated that all Responsible Declarations for the reduced VAT rate on the purchase or construction of a residence must be completed and submitted exclusively through the Tax For All (TFA) system.
