A building’s age alone no longer determines whether it is considered “new” for VAT purposes in Cyprus. Its actual period of use is now central to the assessment.
What changed: From 1 September 2026, the way in which a building is determined to be “new” for VAT purposes in Cyprus changed.
The new rule: A building is considered “new” and its sale is therefore subject to VAT unless it has been used on a systematic basis for at least 18 months. If it has been used, for example through rental or owner-occupation, for 18 months or more, it is considered “used” and is exempt from VAT.
Practical examples:
- A five-year-old building that has never been used → considered “new” → VAT applies
- A building used by its owner for three years → “used” → VAT exemption
- An apartment used for only six months → “new” → VAT applies (but it may qualify for the reduced rate)
- A house used for 17 months → still “new” → VAT applies
- A house used for 18 months and one week → “used” → VAT exemption
Important regarding the reduced rate (5%): Even a “new” building that is subject to VAT may qualify for the reduced rate of 5%, provided that other conditions are met, including those relating to its size and value and the buyer’s eligibility.
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