The issue of VAT on the acquisition of a house remains stalled
Statement by AKEL MP Andros Karkallas after the meeting of the Parliamentary Finance and Budget Committee
28 March 2022
We have been driven to the current deadlocks because of this government’s abuses committed in the implementation of the legislation for the reduced 5% VAT rate, so as to serve friends, best men and in-laws, through the golden passport scheme.
In other words, we found before us the weakening and erroneous implementation of the legislation, which led to the reduced 5% VAT rate being granted to wealthy investors who, for purposes of acquiring citizenship, were buying an apartment worth millions of euros, possibly within the limits of the area defined in the government bill.
So what, according to the government, if this apartment wasn’t used as a main and permanent place of residence in the Republic, as provided for quite clearly in the relevant legislation.
In any case, the briefing we had today from the Finance Ministry adds to our concerns and worries, since, always according to this briefing, the rejection of the recommendation to cover the 200 square metres with a ceiling of 275 square metres existed, while the infringement procedure against the Republic of Cyprus is ongoing.
We are awaiting the development of the consultations with the European Commission and have requested that within a specific period of time the government come back with its final positions on the bill.
We once again recall that a bill proposal submitted by AKEL is currently before the Finance Committee. A bill proposal that was tabled in 2019 and which includes provisions so that the reduced VAT rate of 5% based should be granted based on the value of the dwelling, that villas and luxury homes should be exempted from the reduced rate concession and those who cannot currently afford to buy or build a house, but wish to extend an existing building, should be made beneficiaries.
Unfortunately, the reality is that the price of the government’s mistakes, omissions and expediencies in the process of implementing this legislation is being shifted on to and paid by society. This is precisely what we must prevent.
