VAT on Home Renovations in Cyprus: The 5% Reduced Rate
Renovation works on a home used as a residence qualify for 5% VAT instead of 19% — but only if specific conditions are met.
In this guide
The 5% reduced VAT rate for renovation works on homes in Cyprus. Conditions, eligible works, what does not qualify and how to claim correctly.
- Standard rate
- 19%
- Reduced rate
- 5%
- First-residence reduced-rate cap
- €350,000
- First-residence maximum value
- €475,000
Reduced rate
5%
Homes used as a residence
Standard rate
19%
If conditions not met
Materials limit
50%
Of the value of the work
Property age
3+ years
Since first use
2026 Update: From 1 September 2026, a home counts as first occupied only once it has been in systematic use for at least 18 months. The 5% rate still needs 3 years from that first occupation. For works after 1 September 2026 confirm both before your contractor applies the 5% rate.
What is the 5% VAT rate on renovations?
Cyprus applies a reduced VAT rate of 5% to renovation, repair and maintenance works carried out on a home that is used as a residence and is at least 3 years from its first occupation. Since December 2015 it does not have to be the owner's main and permanent residence. Without this reduced rate the standard 19% VAT would apply — meaning the reduced rate represents a saving of 14 percentage points on all qualifying works. On a €50,000 renovation project that is a €7,000 VAT saving.
Conditions that must ALL be met to qualify
- The property must be a home used as a residence — since December 2015 it does not have to be your main residence
- The property must have been completed and first used at least 3 years before the renovation works begin — from 1 September 2026 'first occupation' means at least 18 months of systematic use
- Materials stay at 5% only up to 50% of the value of the work — any excess materials are charged at 19%
- The property must be used exclusively as a private residence — no business use
- The works must be carried out by a VAT-registered contractor in Cyprus
- The contractor must apply for the reduced rate — it is not automatic
The 5% rate is not automatic. Your contractor must apply it correctly and issue invoices at 5%. If they charge 19% in error you cannot simply recalculate — the invoice must be corrected. Confirm the rate before works begin.
What works qualify for the 5% rate?
- Structural repairs — foundations, walls, roof
- Plumbing and heating installation or replacement
- Electrical wiring and installation works
- Plastering, rendering and internal finishing
- Tiling, flooring and carpentry
- Painting and decorating
- Window and door replacement
- Bathroom and kitchen fitting — where carried out as part of broader renovation
- Extensions to an existing home — in certain circumstances
What does NOT qualify for the 5% rate?
- Non-residential buildings — offices, shops and other commercial property
- Properties used partly for business purposes
- New builds — the property must have been in use for at least 3 years
- Materials purchased separately without installation, and supplied materials worth more than 50% of the value of the work — the excess is charged at 19%
- Architect fees and professional services charged separately from the works
- Furniture, appliances and fittings that are not fixed to the structure
How materials are treated
Materials the contractor supplies as part of the renovation stay at 5% only up to 50% of the value of the renovation service. Materials above that limit are charged at the standard 19% rate, while the labour stays at 5%. There is no minimum project value: small renovation jobs qualify on the same conditions as large ones.
How to ensure your contractor applies the right rate
Before signing a contract confirm with your contractor that they are VAT registered in Cyprus and that they will apply the 5% reduced rate to the works. They should be familiar with the scheme. Ask them to confirm in writing that the works qualify. The contractor is responsible for ensuring the conditions are met before applying the reduced rate — but if you provide incorrect information (for example misstating the age or use of the property) the liability falls on you.
Keep evidence that the conditions are met — your address registration, utility bills at the property, and any documentation confirming the property's age. The Tax Department can audit renovation VAT claims and will ask for evidence if they do.
VAT on renovation vs VAT on new builds
The first sale of a new residential property by a developer has its own rules — a reduced rate for a qualifying first home, within area and price limits — which are separate from the renovation reduced rate. If you are renovating an existing property that is at least 3 years from its first occupation and is used as a residence the 5% renovation rate applies. These are two separate provisions in Cyprus VAT law and the conditions for each are different.
Key takeaways
- ●Renovation works on a home used as a residence in Cyprus qualify for 5% VAT instead of 19% — a saving of 14 percentage points
- ●The home must be used as a residence and be at least 3 years from its first occupation — there is no minimum project value
- ●Since December 2015 second homes and holiday homes can qualify too — the home does not have to be your main residence
- ●The 5% rate is not automatic — your contractor must apply it and issue invoices at the correct rate
- ●Materials stay at 5% only up to 50% of the value of the work, and materials bought separately are always 19%
Frequently asked questions
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