VAT Refund On Plot Purchases

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G. Vrikis & Associates LLC is a rapidly expanding and prominent law firm in Cyprus. Established in 2015 by its managing partner, Mr. George Vrikis, the firm has been focused in providing high-level legal advice to its clients and expanding its international profile and clientele, while at the same time maintaining a prompt, proactive and family office-approach for its clients. The Firm has expanded to a second location in Limassol in 2019, with the addition of Mrs Christiana Kouppi as a Partner.
VAT originally would have been charged at the standard rate of 19% on the value of the plot.
Cyprus Real Estate and Construction

The Cyprus tax authorities announced on 24 September 2019 that individuals who had purchased undeveloped building land on or after 2 January 2018 for the sole purpose of constructing a dwelling to be used as their principal and permanent place of residence would be entitled to a partial refund of the VAT paid.

VAT originally would have been charged at the standard rate of 19% on the value of the plot. The VAT refund would be equivalent to VAT at 14%, reducing the effective VAT rate to 5%.

To claim the refund, the taxpayer would be required to submit an affidavit in a format to be specified by the tax authorities and the Tax Commissioner recently published the relevant form on the tax authorities' website. The affidavit must be completed and submitted at the same time or after the submission of the affidavit required to apply a reduced rate of VAT on the purchase or construction of a residence, necessary where the taxpayer is building a house on the site.

Within six months after occupying the property as their principal and permanent residence, the taxpayer must submit the necessary forms and supporting documentation (e.g. utility bills).

The VAT refund will be made once all the required documentation has been submitted.

Individuals who purchase separately the plot of land to be used for the construction of their principal and permanent residence have the right to a partial refund of the VAT paid (14% of the value of the plot).

Originally published 7 March 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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