Lawmakers on Thursday will again discuss the hot issue of reduced VAT on homes now that the European Commission has dismissed the Mediterranean island’s latest proposal.
Cyprus’ proposal was the imposition of 5% VAT on houses/apartments with a value of up to €350,000 and with an area of up to 190 square metres.
However, the Commission demands the reduced VAT to be imposed on just 110 sqm of a dwelling – that is, 90 square metres less than what the bill provides.
In the upcoming extraordinary meeting of the House Finance Committee the political parties will try to come up with a new proposal.
On the one hand, this should satisfy the Commission and be in line with the social purpose of the Directive. And, on the other hand, this should substantially affect the real estate market and will not leave many stakeholders outside the legal framework.
Insiders told Philenews that two-three proposals are currently on the table, including those previously rejected by the House plenum.
The parties’ common denominator remains the non-segregation of apartments and houses and a uniform tax treatment for all types of housing.
There is also party consensus on the ceiling of the eligible value, but there are divided views on the area of the dwelling that will benefit from a 5% VAT.
