Global Daily Tax News, Cyprus Probing Abuse Of Main Residence VAT Relief, (Jun 26, 2025)

Cyprus's tax authority is undertaking a campaign to detect non-compliance in relation to claims for the five percent reduced rate of value-added tax for the purchase or construction of a main and permanent residence.

Under Cypriot VAT law, taxpayers may avail themselves of the five percent VAT rate only if the residence acquired or built is used as the taxpayer's main and permanent residence for a period of at least ten years.

In a June 25 statement, the tax agency appealed to taxpayers to declare a change in circumstances if they have ceased to qualify for the tax break.

The tax agency said: "Where and when financial difficulty is identified for a one-time repayment of the debt, the possibility of gradual repayment of up to 12 installments will be given, while in exceptional cases the Tax Commissioner may approve an extension of the repayment plan."