The Amending VAT Law (Ν.42(I)/2023), effective as of 16 June 2023, introduced significant changes to the application of the reduced VAT rate on the supply or construction of a dwelling to be used as the main and permanent place of residence. This legal framework was recently supplemented by the VAT (Amendment) Law of 2026 (Ν.109(I)/2026), published in the Government Gazette on 24 April 2026.
By way of reminder, a transitional period was introduced, allowing applicants to benefit from the previous provisions (i.e. application of the reduced VAT rate on the first 200 m² of buildable residential area), provided that:
- a town planning permit had been obtained, or an application for such permit had been submitted, by 31 October 2023; and
- a duly completed application for the reduced VAT rate was submitted to the Tax Department within three (3) years from the effective date of the amending law (i.e. by 15 June 2026).
The recent amendment provides that the Tax Commissioner may examine qualifying applications until 31 December 2026, provided that any delay is attributable to the town planning authorities.
As clarified in the relevant Announcement issued by the Tax Department on 4 May 2026, the Tax Commissioner will accept applications submitted from 16 June 2026 to 31 December 2026 for the purpose of benefitting from the reduced VAT rate on the first 200 m², in cases where:
- a town planning permit had been obtained, or an application for such permit had been submitted, by 31 October 2023; and
- the building permit was issued after 1 January 2025 or has not been issued by 31 December 2026.
However, in cases where a town planning permit had been obtained, or an application for such permit had been submitted, by 31 October 2023 and the building permit was issued by 31 December 2024, the deadline for submitting the relevant application to the Tax Department remains 15 June 2026.
We would like to remind you that the relevant application must be submitted exclusively via the Tax For All (TFA) portal. Accordingly, interested parties wishing to benefit from the previous provisions (i.e. application of the reduced VAT rate on the first 200 m² of buildable residential area), as well as businesses operating in the construction sector, should ensure that the applicable transitional requirements are duly met.
