Cyprus updates reduced VAT Rates for education construction and extends Zero Rating on essentials
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Cyprus has introduced a 5% reduced VAT rate for construction and renovation works on buildings used for VAT-exempt educational activities, effective 5 December 2025.
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The temporary zero VAT rate on selected basic goods has been extended to 31 December 2026.
See more in our Cypriot VAT guide.
Rollover of zero-rating on basic goods
Separately, Decree No. 337/2025 extends the temporary zero VAT rate on basic goods until 31 December 2026. The relief continues to apply to baby milk (liquid and powder), child and adult diapers, feminine hygiene products, and specified fresh or chilled fruits and vegetables.
VAT support for eduction
Cyprus has enacted Decree No. 364/2025, amending its VAT legislation to apply a reduced VAT rate of 5% to construction, renovation and repair works carried out on buildings used for VAT-exempt educational purposes. The reduced rate covers both labour and materials and applies to new builds as well as refurbishments.
Eligible users include public educational institutions at all levels, private schools registered under the Private Schools and Institutes Law, private tertiary colleges, and other organisations recognised by the Tax Commissioner as providing training closely linked to higher education (for example, clinical training facilities). Private tutoring institutes and afternoon schools that fall outside the VAT-exempt education framework are expressly excluded.
The measure is intended to lower capital costs for education providers and support investment in educational infrastructure. However, many institutions operate mixed activities, combining VAT-exempt education with taxable services such as summer programmes or extracurricular activities. Further guidance from the Cyprus Tax Department is expected on how the reduced rate will apply where buildings are used for both exempt and non-exempt purposes. Transitional rules also allow taxpayers to apply the new 5% rate to qualifying services supplied after the effective date, even where invoicing or payment occurred earlier.
