[PIO] Imposition of reduced VAT on the acquisition of a first home

The issue of imposing a reduced VAT rate of 5% on the acquisition of a first home in the context of social policy has been of concern to the Government, the House of Representatives and society for almost two years.

Weighing the risks from the fact that from July 2021 Cyprus received an infringement letter, our Government from the very first days put the issue on its priorities.

On the initiative of the Ministry of Finance, intensive contacts and consultations began, both with the competent European Commission and with the Parliament, in order to reach a conclusion for the benefit of society and the economy, but always within the framework of the specific provisions of the Community Directive.

The Ministry of Finance submitted to the Parliament a specific Proposal, which had the consent of the European Commission. Throughout the debate in Parliament, the Government was in constant communication with the European Commission, and the Ministry of Finance had developed a constructive mediating role in order to reach a conclusion.

We welcome the fact that even with the manipulations of the Parliamentary Finance Committee there was an almost unanimous vote on the bill.

On the basis of these facts, the Government will support the final decision of the Parliament before the European Commission, aiming at its acceptance, but also at restoring a chronic distortion, in the sensitive social issue of home ownership.

(ΕΠ/ΣΧ)

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