The Cypriot Government as from 1 October 2011 has introduced a reduced rate of VAT 5% on every acquisition or construction of new residence provided that the residence will be used as the main residence of the purchaser. The new rules apply only to agreements which are concluded from 1 October 2011 onwards.

For all the agreements or acquisitions which were concluded prior to the above date the previous legislation of refund of VAT on the construction or acquisition of first residence apply.