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The House of Representatives of Cyprus, for the purposes of harmonizing the legislation with the EU Value Added Tax (“VAT”) Directive, voted on 30/11/2017 a new VAT Law which amends the main VAT Law N.95(I)/2000.

A. VAT on the sale of building land (apply as from 02/01/2018)

The supply of undeveloped building land, in the course of a business activity, is subject to VAT at the standard VAT rate of 19%.

Business activity should be based on the facts of each case separately. The supply of land is not taxed when it is done as an isolated transaction.

Criteria should be taken into consideration to determine whether the supply of undeveloped building land is in the course of a business activity:

  • Is the activity a serious undertaking earnestly pursued?
  • Is the activity an occupation or function, which is actively pursued with reasonable or recognisable continuity?
  • Does the activity have a certain measure of substance in terms of the quarterly or annual value of taxable supplies made (bearing in mind that exempt supplies can also be a business)?
  • Is the activity conducted in a regular manner and on a sound and recognised business principles?
  • Is the activity predominantly concerned with the making of taxable supplies for a consideration?
  • Are the taxable supplies that are being made of a kind which, subject to differences of detail, are commonly made by those who seek to profit from them?


  • Sale of undeveloped land by a person who inherited the land and who does not carry out a business activity and this transaction took place after seven (7) or ten (10) years followed up by a transaction for another plot of land, then this is a strong indication that it relates to an isolated transaction.
  • If the plot of land is company’s asset, its disposal will be a taxable(vatable) transaction, irrespective of the type of economic activity that the company carries out.
  • Supply of two (2) plots of land on 2017 and three (3) plots of land on 2018. These transactions are indication of business activity.

No VAT will be imposed on the supply of land located in livestock zone or areas which are not intended for development such as zones/areas of environmental protection, archaeological and agricultural.

B.VAT on the rental of properties (apply as from 13/11/2017)

The lease or rental of immovable property to a taxable person for business premises (all properties other than residential properties) is considered as a taxable transaction and is taxed at a rate of 19%.

The lessor will have the right to elect for such transactions to continue to be exempt by notified the Commissioner. If this right exercise it cannot be retracted a later stage.

Based on the new legislation:

  • the lease or rental of immovable property to a taxable person for furtherance of the business is considered as a taxable transaction and is taxed at a rate of 19%, unless the building is used as a dwelling
  • the above applies provided that the commencement of the lease or rental agreement was on or after the coming into effect of the amending law
  • the value of the supplies in the period of one year has to exceeded €15.600
  • the lessor may opt for the exemption from VAT of the lease or rental of immovable property (subject to terms and conditions which will be determined by notification in the Official Gazette of the Republic), provided the lessor informs the Tax Commissioner of this decision
  • the lessor cannot subsequently change the decision for the exemption from VAT of the lease or rental

Existing contracts for the lease or rental of real estate (except residential properties), remain in force and are not affected by the above amendment. Therefore, the lease/rental is deemed to be an exempt transaction and is not taxable.

In case of termination and conclusion of a new agreement after 13 November 2017, the lease/rental will be a taxable transaction.

VAT refund

For a property that the lease/rent was made as an exempt transaction before 13 November 2017, the lessor is entitled to deduct the VAT on the construction costs of the building, provided that (i) 10 years have not elapsed since the date of construction/ purchase, and (ii) the lessor concluded a new lease/rental agreement after 13 November 2017 (i.e. a taxable transaction).

In case which the property falls within the 10-year timeframe, the VAT on construction costs is adjusted for the remaining years, starting from the year of its initial use. The initial use is deemed to be the time of acquisition of the building or its first use whichever comes first, and whether the owner was a VAT registered person or not.

C. The reverse charge is imposed on the transfer of property in the context of loan restructuring (apply as from 02/01/2018)


Its apply when a property is transferred from the borrower in the course of a loan restructuring process as well as under a compulsory transfer procedure to the lender.

This provision was enacted in order to facilitate the payment of VAT in cases where the taxpayer is no longer in a sustainable financial position, with a bank having to take possession of the property which was held as a guarantee against the loans provided.

The above supplies are deemed to be taxable transactions for both the recipient and the person who makes them, provided that the recipient receives the goods

in furtherance of the business.

The VAT deduction on the above-mentioned transactions based on the reverse charge method is possible, if:

  • the taxable person supplies the property to the recipient
  • the recipient is a taxable person at the time of the transaction and receives the Property for furtherance of the business
  • input tax is deductible by the taxable person, provided that VAT is accounted for by the recipient

Tax Advisor
Andreas Avgousti


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A 建筑用地出售增值税(自2018年1月2日起生效)




  • 该活动是否属于严肃从事的事业?
  • 该活动是否属于职业型还是功能型,其是否会通过合理及可见的方式积极持续下去?
  • 该活动是否有特定的实质性衡量标准用于计量季度或者年度应税供应价值(记住被豁免供应也可以成为业务)?
  • 该活动是否有规则的进行,并且有良好和可识别的商业准则?
  • 该活动是否主要涉及有偿制造应税供应?
  • 应税供应基于其细节差异是否属于被用于逐利的常规制造类别?



  • 继承未开发土地的没有从事任何业务活动的人士在出售该等土地时,若该等出售距离其上次出售另一块土地时间相差七 (7) 年或十 (10) 年,则该等出售有很大可能属于被隔离交易。
  • 若该等土地为公司资产,其处置将会构成应税(vatable)交易,不论该等公司在从事何种经济活动。
  • 2017年供应两 (2) 块土地,而2018年供应三 (3) 块土地。该等交易可能属于商业活动。


  1. 物业出租增值税(自2017年11月13日起生效)




  • 将不动产出租或租赁给应税人士用于业务营运应被视作应税交易,并且应按19%的税率纳税,除非该等物业被用于住宅用途。
  • 上述规则适用于所有于修订法律生效之日或之后开始的出租或租赁协议。
  • 一年内的供应物价值必须超过600欧元
  • 出租人可以选择将不动产以被豁免支付增值税的方式出租或租赁(根据共和国官方公告条款决定),唯出租人须通知税务官其决定
  • 出租人不得在随后更改该等以被豁免支付增值税的方式出租或租赁的决定




对于在2017年11月13日之前以被豁免方式租赁/出租的物业,出租人有权从建筑的建造成本中扣除增值税,前提为 (i) 相关建筑建造/购买于不超过10年之前,且 (ii) 出租人在2017年11月13日后达成了新的租赁/出租协议(即应税交易)。


  1. 贷款重组中的物业转让将被反向收费(自2018年1月2日起生效)





  • 应税人士向接收方供应物业
  • 接收方在交易进行时为应税人士且接收物业用于业务持续运营
  • 进项税由应税人士扣减,惟增值税应由接收方入账



Andreas Avgousti