Cyprus – VAT Update

The Cyprus Parliament has passed on the 3rd November 2017 an amendment to the relevant VAT law, effectively introducing VAT imposition at the standard rate (currently 19%) to the sale of land which is for building purposes and the leasing and/or rental of business premises. Furthermore, the new provisions introduce the "reverse charge mechanism" for VAT-applicable supplies of land and property under a loan restructuring and//or forced-sale arrangement with a creditor.

These new provisions now bring Cyprus in line with the EU Directive on VAT, for which Cyprus had obtained a temporary exemption upon succession into the EU.

In more detail, the new provisions are as follows:

1. VAT imposition on sale of land for building purposes