Summary
- Legislative changes & timing: On 27 February 2026, Cyprus amended the Eighth and Fifth Schedules of the VAT Law (Law 95(I)/2000) via R.A.A. 103/2026 and 102/2026, revising the VAT treatment of building supplies and the reduced VAT rate for renovation and repair services; the new rules apply from 1 September 2026 and significantly affect real estate stakeholders.
- Supply of buildings – VAT trigger: From 1 September 2026, the sale of buildings (or parts thereof), including the land transferred with them, is subject to VAT if supplied before first occupation, with “first occupation” defined as systematic use of the building for at least 18 months, replacing the former time‑based approach.
- Renovation and repair services – reduced rate alignment: The definition of first occupation is also revised for the purposes of applying the reduced 5% VAT rate on renovation and repair services, aligning the reduced‑rate rules with the new VAT framework for the supply of buildings.
Detailed
On 27 February 2026, Cyprus amended the Eighth Schedule and Fifth Schedule of the VAT Law (Law 95(I)/2000) through Regulatory Administrative Acts (R.A.A.) 103/2026 and 102/2026, respectively. These amendments substantially revise the VAT treatment of the supply of buildings and the application of the reduced VAT rate on renovation and repair services. The new rules will apply as from 1 September 2026 and are expected to have a significant impact on developers, investors and buyers. [pwc.com.cy], [knowledgen….pwc.co.uk]
Supply of buildings – revised VAT scope
Under R.A.A. 103/2026, new conditions are introduced to determine when the supply of a building is subject to VAT. As from 1 September 2026, VAT will be imposed on the sale of buildings or parts thereof, including the land transferred together with them, where the supply takes place before the first occupation of the building. [pwc.com.cy], [knowledgen….pwc.co.uk]
For this purpose, “first occupation” is newly defined as the first use of the building, where such use constitutes systematic use for a period of at least eighteen (18) months. This definition replaces the previous framework that relied more heavily on time‑based criteria following completion of the building. [pwc.com.cy], [knowledgen….pwc.co.uk]
Renovation and repair services – updated definition of first occupation
In parallel, R.A.A. 102/2026 amends the Fifth Schedule of the VAT Law by revising the definition of first occupation specifically for the purposes of applying the reduced 5% VAT rate on renovation and repair services. The amendment aims to align the interpretation of first occupation with the revised rules applicable to the supply of buildings. [pwc.com.cy], [knowledgen….pwc.co.uk]
Effective date and impact
Both amendments will enter into force on 1 September 2026. The revised rules are expected to significantly affect the VAT treatment of real estate transactions, particularly those occurring close to the transition date, as well as the eligibility for VAT exemption or reduced rates in the context of building sales and renovation works. [kpmg.com], [pwc.com.cy]
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