Lawmakers on Monday debated a revised proposal providing for the application of a lower VAT rate of 5 per cent for primary residences worth up to €350,000. And for residences exceeding this value, the VAT rate is set to rise to 19%.
But nothing is definite yet, even though the latest proposal, submitted by right-wig Disy just before the Easter holidays, seems to be gaining approval by most parties.
Philenews also reported on Tuesday that the debate took place at a time when the issue of Cyprus’ non-compliance with the European Directive is before the legal services of the Commission.
And the case is set to be sent soon before the Court of Justice of the European Union.
That is why Permanent Secretary of the Ministry of Finance, George Pantelis, warned the House Finance Committee members who met behind closed doors that a final decision on this long-standing issue is urgent.
In the worst-case scenario, Brussels can impose a hefty fine on a country for non-compliance.
Brussels contends that Cyprus does not properly apply VAT rules for homes purchased or built here.
VAT directive 2017/541 allows member states to apply a lower rate for first homes as part of social policy.
But the broad interpretation of the Cyprus provision apparently exceeds the social policy aim stated in the directive, for such an exemption.
