On 3 November 2017, an amendment to the Cyprus VAT legislation was voted into law by the House of Representatives, which will impose VAT at the standard rate of 19% on land transactions for business purposes, bringing it into line with the common EU system of VAT. The amendment law has published in the Official Gazette of the Republic of Cyprus on 13 November 2017 and will come into force on 2 January 2018.
Specifically, the amending law changes that it provides for VAT to be charged on the transfer in the course of the economic activities of the transferor of undeveloped buildable land which is intended for the construction of one or more fixed structures, and the leasing or letting of immovable property to a taxable person for the purposes of undertaking taxable activities, excluding the leasing of a building used for private dwellings.
The lessor will have the right to elect for such transactions to continue to be exempt under a procedure to be notified by the Commissioner under certain conditions.
In addition, the law provides that VAT for transactions whereby ownership of new buildings or land subject to VAT, is transferred from the borrower to the lender as part of a loan restructuring or under forced transfer conditions.