Economy category powered by

Keravnos: EC has greenlighted law on reduced VAT for primary residences

The European Commission has given the green light for the law approved by the Parliament concerning the reduced VAT rate of 5% for the acquisition of a primary residence, Finance Minister Makis Keravnos has said.

In June 2023 the parliament approved a law imposing a reduced VAT rate of 5% for the first 130 square metres of a primary residence which was put in effect in November 2023. However, the Commission initially insisted on imposing a reduced VAT rate only for the initial 110 square metres. The Finance Minister held numerous contacts with the EU Finance Commissioner and the head of the competent Directorate-General in a bid to secure the Commission’s consent.

The law, as approved by the Parliament, provides that the reduced VAT rate applies to the first 130 square metres of a primary residence, provided that the value of a primary residence was up to €350,000, while the total transaction value did not exceed €475,000, and the total constructed internal areas did not exceed 190 square metres.

Speaking on 22 January, Keravnos said that “tremendous efforts” have been made to secure the Commission’s green light, noting that he repeatedly met with the EU Finance Commissioner Paolo Gentiloni and the head of the competent DG advocating for the approval of the legislation enacted by the Parliament.

“I am happy to announce that the European Commission has approved the reduced VAT rate of 5% either for a house or an apartment for the first 130 square metres of a value of up to €350,000, provided that the residence does not exceed 190 square metres in area and €475,000 in value, that is, as the law was approved by Parliament,” he said.

Fiscal buffers could tackle geopolitical disruptions

---------------------

Responding to a question on whether public finances could tackle disruptions stemming from geopolitical tensions in the region, Keravnos recalled that the Finance Ministry and the government pursue a prudent fiscal policy “precisely to be able to tackle events and developments which cannot be foreseen.”

Many businesspeople in Cyprus have expressed fears over the war between Israel and militant group Hamas in the neighbouring Gaza Strip as well as the impact of attacks by Houthi on commercial ships in the Red Sea on the economy.

“Therefore, we have a budget in surplus for 2024 and the budget has safety clauses to tackle these disruptions and geopolitical developments and the ensuing negative impact,” Keravnos added.

(Source: CNA)

Read More

Thanos Michaelides: The German market may become equivalent to the UK's for Cyprus tourism
Eurobank Group to build care centre and independent living residences for people with disabilities
Infocredit Group receives Partner Excellence Award from HostingB2B
Shipping’s future in focus at “Maritime Cyprus 2025”
The new Starbucks store on Stavrou Avenue has opened its doors (pics)
Christodoulides showcases over 80 projects worth over €1b for the city and province of Nicosia
Cyprus achieves deployment of country's first quantum communication network
Cyprus’ EU Presidency a unique opportunity for the country, President says
ERATOSTHENES-UAE explore collaboration in Earth Observation, Space Technologies
Commission endorses positive preliminary assessment of Cyprus' €75.9m NextGenerationEU request