Cyprus VAT on renovation: 5% or 19%, and what changed in 2026

A painter quotes 12,000 euro to repaint a Limassol apartment. At 5% the VAT is 600 euro. At 19% it is 2,280 euro. The 1,680 euro in between is decided by facts about the building — and by nothing the painter can see from the scaffold.

That is the everyday shape of the reduced rate in Cyprus. It is the single most valuable line in a renovation quote, it is easy to get right, and since 1 September 2026 the test behind it has a second limb that nobody had to think about before.

The rates, as they stand

For a builder, plumber, electrician, carpenter or painter working in Cyprus, only two of these matter in practice: 5 and 19. Everything below is about which of the two a given job falls into.

What the reduced rate actually covers

The Fifth Schedule of the VAT Law, N. 95(I)/2000, brings the renovation and repair of private dwellings within the reduced rate. The work is described by what it is, not by which trade does it: plumbing, electrical work, carpentry, painting and building work on an existing dwelling all sit inside it. Houses and apartments both count.

Three things sit outside it, and each of them catches somebody every year:

• Commercial premises. A shop, an office, a workshop, a restaurant. The word in the Schedule is dwelling. Repainting the flat above the shop is 5%; repainting the shop is 19%.
• New build for a third party. Constructing a house for a developer or an investor is a standard-rated supply. The reduced rate for construction of a residence is a different relief with its own conditions — see below. And where that developer is VAT-registered, the rate question does not even arise, because the supply is reverse-charged: Cyprus VAT reverse charge in construction: Article 11B, and when a subcontractor charges none.
• A building nobody has lived in yet. This is the limb that changed on 1 September 2026.

The test for old, in two limbs

Before September 2026 the question was arithmetic: had three years passed since first occupation? Since then, "first occupation" has a definition, and the definition has a duration in it.

Two decrees gazetted on 27 February 2026 did the work — KDP 102/2026 on the Fifth Schedule (reduced rates) and KDP 103/2026 on the Eighth Schedule (exempt supplies of buildings) — both in force from 1 September 2026. They replace the old time-based test for a new building with a use-based one. First occupation is now:

the first use of the building after it has been constructed, self-use, leasing, or any other use which is carried out on a systematic basis

and that first use has to have run for at least eighteen months to count.

Read the two limbs together and the practical test comes out like this:

1. Has the dwelling been in real, systematic use for at least eighteen months? Lived in, let out, occupied by the owner. A finished building standing empty does not start the clock.
2. Have three years passed since that use began?

Only when both answers are yes is the dwelling old for these purposes.

What the change actually did was close a gap. Under the old wording a developer could hold a completed block, let the calendar run, and a renovation on it would eventually price at 5% even though the flats had never been occupied. Use, not time, is now what ages a building.

What you can and cannot verify

You cannot see eighteen months of systematic use from a scaffold, and there is no certificate for it. The Tax Department has published no practice note on the September decrees at the date of this article, so what counts as proof is not yet settled in guidance.

What is settled is who has the documents. The customer does. Before you quote, ask for one of these and keep a copy with the job:

• the title deed or sale contract with a date;
• a tenancy agreement covering the relevant period;
• utility bills in somebody's name across eighteen months — the electricity account is the cleanest single document in Cyprus, because it is hard to have one on a building nobody uses;
• for a customer's own home, the certificate of final approval plus anything showing occupancy from that date.

Two sentences in the quote do the rest of the work: the price assumes the dwelling qualifies as old for the purposes of the Fifth Schedule of the VAT Law; if it does not, VAT of 19% applies. That is not legal armour. It is the difference between a conversation before the job and an argument after it.

And the age of the building is the second question, not the first. If the customer is a taxable person, Article 11B settles the invoice before the Fifth Schedule is ever reached — the order the two questions come in is set out in The VAT number in Cyprus decides the rate on your invoice.

The materials rule, and when it bites

The reduced rate does not extend without limit to what you buy in. PwC's Cyprus summary states the boundary plainly: the rate applies to renovation, repair and extension of used private residences, excluding materials that exceed 50% of the value of the services.

So the test is a ratio, and it is the same shape as the one Irish trades know:

Three consequences worth pricing in:

1. On labour-heavy work the cap never bites. Painting, plastering, tiling, most electrical second-fix. Do not complicate a quote that does not need it.
2. On product-heavy work it usually does. A kitchen, a bathroom suite, a full window replacement, a heat pump. Split the quote so the ratio is visible on the page rather than reconstructed later from receipts.
3. A supplier price rise can move a job across the line after you have quoted. If you gave a VAT-inclusive figure, that difference is yours.

The other 5%: the first and main residence rate (πρώτη κατοικία)

Cyprus has a second reduced rate at the same percentage, and it is a completely different relief with a completely different procedure: the first and main residence scheme — πρώτη κατοικία — for the acquisition or construction of a home.

This is the one your customers will have read about, because it is the reduced rate ordinary people in Cyprus actually go looking for. Do not let that pull a renovation quote in the wrong direction: the two reliefs share a percentage and nothing else.

The permanent regime that came in with Law 42(I)/2023 caps it: 5% on the first 130 m² of buildable area, provided total buildable area does not exceed 190 m², and on the first €350,000 of value, provided total value does not exceed €475,000. Above 190 m² or above €475,000 the whole supply goes to 19%. Transitional treatment for older permits — 5% on the first 200 m² with no value cap — was extended in April 2026 to run to 31 December 2026 in defined cases where the building permit was delayed.

Two practical differences from the renovation rate:

• There is a paper procedure. The buyer or owner files a declaration and obtains a reduced-rate certificate, and since May 2024 that runs only through the Tax For All (TFA) portal. No certificate, no 5%. The declaration is the αίτηση για μειωμένο ΦΠΑ πρώτης κατοικίας; if a customer says they have "applied for the 5%", that is the thing they mean.
• It has a ten-year tail. If the property stops being the main residence within ten years, the difference between 5% and 19% is repayable in proportion, and the Tax Commissioner has to be told within 30 days.

If you are a subcontractor on a first-home build, the certificate is the client's to obtain and yours to see before you invoice at 5%.

A short checklist before the quote goes out

1. Dwelling or not? Commercial premises are 19%, full stop.
2. Renovation or new build? Repair and renovation of the existing structure is the reduced-rate category.
3. Old, on both limbs? Eighteen months of systematic use, and three years since it began. Ask for the document.
4. Run the materials ratio. If materials look like more than half the job, split the quote before you price it, not after.
5. State the assumption in writing, and quote VAT-exclusive on anything marginal.
6. On a first-home job, see the certificate. It is not your relief to claim.
7. Show the rate per line, not blended. A split-rate job has rules of its own on the invoice itself — what the Tenth Schedule requires on a Cypriot invoice.

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Position as at 6 September 2026. This article describes the law as published and is not tax advice. The decrees KDP 102/2026 and KDP 103/2026 took effect on 1 September 2026 and Tax Department guidance on their application had not been published at the date shown; the sources listed are those checked on that date.

What Zirko does here: a document keeps the VAT rate that applied on the day it was issued, so a later rate change or a reclassification cannot quietly rewrite an invoice you have already given a customer. Zirko does not decide whether a dwelling is old — that is a fact about your customer's building, and it belongs in the job file next to the quote.