The Cyprus House of Representatives voted On 03/11/2017 the Cyprus House of Representatives voted a new VAT Law, namely ‘Ο περί Φόρου Προστιθέμενης Αξίας (Τροποποιητικός) (Αρ.3) Νόμος του 2017’, (hereinafter the ‘amending law’), which amends the main VAT Law N.95(I)/2000, (hereinafter the ‘main VAT Law’).
The new law introduces VAT at the standard rate for the sale of building land and the leasing/rental of business. (B2B transactions)
- Building land is subject to VAT at 19% as from 02 January 2018
The amending law changes the Eighth Schedule of the main VAT Law to include building land to VAT rules at standard rate. Specifically, the supply of undeveloped building land intended for the erection of one or more fixed structures is subject to VAT at the standard rate of 19% when the supply is part of a person’s economic activities. The legislation affects all transactions taking place after 02 January 2018.
- Leasing of commercial property for business purposes is subject to VAT at 19%, as from 13 November 2017
Rental/leasing of business premises (i.e. all properties other than residential properties) subject to VAT at the standard rate of 19% when it is a B2B transaction and the recipient engages in taxable activities.
The lessor will have the right to elect for such transactions to continue to be exempt under a procedure notified by the Commissioner, but if this right is exercised it cannot be retracted at a later stage.
This provision is in force for agreements signed as of 13 November 2017. The change in legislation affects all new contracts after 13 November 2017 or any renewals taking place after that date.