The European Commission has sent a reasoned opinion to Cyprus for not properly applying EU VAT rules on dwellings. Cyprus allows a reduced VAT rate of 5% on the first 200m2 of dwellings used as the principal and permanent residence without limitations. However, the wide scope of the Cypriot legislation and the lack of limitations indicate that the measure goes beyond the objective of social policy. The Commission considers that Cyprus has failed to fulfil its obligations under the VAT Directive. Cyprus now has two months to address the shortcomings identified, or the Commission may refer the case to the Court of Justice of the European Union.
Source: Orbitax
