New VAT rules for real estate properties in Cyprus take effect

New regulations regarding Value Added Tax (VAT) on real estate properties became effective in Cyprus on September 1, 2026. The legislation introduces a critical 18-month threshold to determine the status of 'first use' for tax purposes. Under the new framework, the tax treatment of a property is no longer solely dependent on the age of the building, but rather on its actual, systematic utilization, such as self-occupation, leasing, or other forms of active use for at least 18 months.

This change significantly impacts developers, property owners, investors, and buyers, as it alters the criteria used to define whether a building is considered 'new' for tax purposes. To ensure consistent application of these provisions, the Department of Taxation is currently drafting a formal circular. A draft of this guidance has been released for public consultation, and stakeholders have until October 8, 2026, to submit their views or feedback before the final implementation guidelines are finalized.