Parliament approves extension for reduced VAT on primary residences

On Thursday, the Cyprus Parliament voted in favor of a bill allowing the Tax Commissioner to approve applications for a reduced 5% VAT rate on primary residences until December 31, 2026. This urgent legislative proposal, submitted by Green Party MP Stavros Papadouris, aims to address delays in the issuance of building and town planning permits by local authorities. Under the new legislation, individuals who applied for permits between June 2023 and October 2023 can utilize the previous, more lenient VAT framework, which applies to the first 200 square meters regardless of total size. The measure passed with 24 votes in favor and 15 against, with AKEL opposing the bill. AKEL parliamentary representative Giorgos Loukaides stated the party voted against it, arguing that the benefit should not extend to those constructing luxury properties worth millions. Tax Committee Chair Christiana Erotokritou noted that the goal is to prevent property buyers from suffering the consequences of administrative delays. The decision allows the Tax Commissioner to review applications that were not processed on time due to these delays.