|
Since Cyprus became a member of the European Union, the sale of new buildings has been chargeable to VAT at the rate of 15%. However, under the Eighth European Directive on VAT, member states are allowed to impose lower VAT rates, subject to a minimum rate of 5%. Due to the fact that the imposition of a lower VAT rate for new homes was considered to be a complicated process for merchants, the tax authorities and businesses in Cyprus, new legislation has allowed for government sponsorship of the purchase or construction of new homes which are to be used as a main and permanent residence.
The granting of the above sponsorship is governed by the provisions of the Law on Special Sponsorship (Purchase or Construction of New Homes), no.91(I)/2006. In particular, the sponsorship is available in the following circumstances:
• Purchase of a building
• Transfer of title to a building
• Construction of a building
as long as any of the above occurs before the building is permanently occupied for the first time and on the understanding that it shall be used as a permanent and main residence
Conditions for making an application:
• The application for planning permission (or building permit in case planning permission is not required) must have been submitted to the relevant authorities after 1.5.2004
• The building is permanently occupied for the first time following its construction for use as a main and permanent residence
• The total area of the building does not exceed 250 s.m
The total area is the total area of the covered spaces of the building to be used as a residence, including engine rooms, store rooms and covered parking area and covered verandas, but does not include the first:
• 5 s.m of an engine room
• 7 s.m of a store room
• 36 s.m of a covered parking area
• 40 s.m of a covered veranda
Calculating the sponsorship
The sponsorship applies only to the first 130 s.m of the building to be used as a residence and the exact amount depends on the type of residence which is it be sponsored (i.e detached /semi-detached, flat, bedroom numbers) and on whether the sponsorship is for the purchase or the construction of a residence
For families with 4 children or more, an additional 15 s.m is added to the maximum area of 130 s.m for every child of the family, other than the first three children.
The exact amount to be sponsored is adjusted every year according to price levels
Limitations
If a person has been sponsored in relation to a residence:
a) they may not apply for sponsorship of a new residence before 10 years has lapsed since the last sponsorship;
b) If the sponsored residence ceases to be used as a permanent and main residence before 10 years have lapsed since the sponsorship, the person who has been sponsored must return the amount of the sponsorship or set it off against any other sponsorship to which he is entitled, having submitted a relevant application. This does not apply in the event that the person in question dies or transfers title to the residence to any of his children, irrespective of his age
|
.jpg "LARNACA CYPRUS")
.jpg)
