Published:

12.03.2026

source:

Melrose villas

Expert recommendations from My Space Real Estate, an agency among the TOP-5 real estate companies in Cyprus.
A transitional period is in effect in Cyprus until June 15, 2026, allowing property buyers to take advantage of the preferential 5% VAT rate instead of the standard 19%. For the market, this is not just a technical legal norm—it is a real financial opportunity window, especially for buyers of premium-segment properties.
Let's look into who can benefit from the concession, under what conditions, and how much can be saved.

What Has Changed in the Legislation?

In 2023, Cyprus aligned the norms for applying the reduced VAT rate with European requirements. New restrictions were introduced:

5% VAT applies to the first 130 m² of residential area
The maximum property value for applying the concession is up to €475,000
For properties priced up to €350,000, the concession applies fully
For properties priced from €350,000 to €475,000, the concession applies partially
For properties priced over €475,000, the reduced rate does not apply (the standard 19% VAT is in effect)

However, a transitional regime is provided for projects where the building permit (planning permit) was obtained or the application was submitted before October 31, 2023. This is what forms the current "opportunity window."

What is the Essence of the Transitional Period until June 15, 2026?

If the property:

has a building permit obtained before October 31, 2023, or
the application for the permit was submitted before that date

and the buyer submits an application for the preferential rate before June 15, 2026,
➡ the previous 5% VAT rules may be applied.

Under the old scheme:

5% was applied to the first 200 m² of residential area
There were no strict price restrictions for premium properties

For large and expensive villas, this fundamentally changes the economics of the deal.

Example: Melrose Villas

Let's consider a villa in the Melrose Villas project in the prestigious center of Limassol in the Agios Tychonas area.

Cost: €1,700,000
Total area (including basement): 297 m²
Building permit obtained before October 31, 2023

Since the residential area is used for calculations and it does not exceed 200 m², the 5% rate can be applied to the entire property (297 m²) if all conditions of the transitional period are met.

Calculation:

VAT at 5%: €1,700,000 × 5% = €85,000
VAT at 19%: €1,700,000 × 19% = €323,000
Savings: €238,000

A difference of almost a quarter of a million euros makes the transitional regime especially significant for the luxury segment.

Market Expert Commentary

According to Viktoria Yatsyuta, a developer, head of the My Space real estate agency, and a Cyprus market expert:

"Today, we see increased interest in properties falling under the transitional provisions. For buyers of premium real estate, this is a strategic moment: the opportunity to apply 5% VAT to a large property effectively reduces the entry budget by hundreds of thousands of euros. After June 15, 2026, this option will no longer be available, and transactions will be calculated under the new, stricter rules."

Why Is This Important Right Now?

1. The transitional regime has a clear expiration date — June 15, 2026.
2. New restrictions apply after this date.
3. Savings on premium villas can exceed €200,000.
4. The number of projects falling under the old permits is limited.

The market is already reacting: properties with "suitable" permits are being considered by buyers more quickly.

What Should a Buyer Consider?

Status of the building permit
Date the planning permit application was submitted.
Compliance with requirements for the main place of residence
Correct submission of the application to the Tax Department

It is recommended to conduct a legal check of the specific property before signing the contract.

Thus, the transitional period until June 15, 2026, is a temporary but significant advantage for property buyers in Cyprus.

For elite projects like Melrose Villas, the difference between 5% and 19% VAT can amount to hundreds of thousands of euros.
Under conditions of tightening regulation, a rare combination of factors is forming right now: a legislative window + a premium product + tangible financial benefit.
After June 2026, this scenario will become history.

For clarification on your VAT inquiries for Cyprus properties — work only with certified and reliable agencies.

My Space Real Estate