I’M really confused with this setup of the VAT returned for first time property buyers in Cyprus. My lawyer has advised me that when I sell my villa, the new buyer will receive the VAT refund. However, the agent says that because the buyer is not buying directly from the developer the property will be classed as a resale.
My lawyer said that this is rubbish. As no one has every used the property and no utility supplies have ever been connected then when I sell it will be as if I never existed.
Then another agent came along and said that it is only Cypriot citizens who are entitled to it. Surely now that we are in the EU there can’t be one rule for one rule for the other.
Have you got any idea who’s right?
Answer
Let me clear up the confusion.
The VAT refund scheme applies to the sale of new properties. There is currently no VAT payable on resale properties, so there isn’t a VAT refund scheme for them – and if the application for the Town Planning Planning Permit was submitted before 1st May 2004, no VAT is payable on the property.
If the property you bought has been lived in, then it will be treated as a resale property when you come to sell it. But if the property has not been lived in, it will be treated as a new property – and when you sell it, your buyer may be able to claim the VAT refund.
Concerning the comments made by the other agent that only Cypriot citizens are entitled to a VAT refund – the VAT refund scheme is available to all EU citizens who qualify.
If you want more information on the regulations, see ‘VAT Regulations when Buying Property in Cyprus‘.
