Cyprus approved a legal amendment this week to cut VAT on the construction and renovation of buildings used for exempt educational services, reducing the rate to 5 per cent from 19 per cent.

Finance Minister Makis Keravnos said after the cabinet meeting that the proposal amends the VAT Law of 2000–2025 and introduces a reduced rate for both public and private educational facilities.

It will apply to public schools, private schools registered under the 1971 Private Schools and Tuition Centres Law, private higher-education institutions listed under the 1996 Higher Education Schools Law, as well as organisations recognised by the Registrar when their activities are directly linked to exempt education.

He noted that the measure “promotes access to quality and modern educational facilities” and aligns with the government’s view that “education is an investment with social return”, adding that it also supports equality and social cohesion.

Regarding implementation, Keravnos said the 5 per cent rate will cover “whatever this means” for renovation works — including labour and materials, as well as the construction of new buildings.

Moreover, the Ministry of Finance will reassess the measure every five years, reviewing both its fiscal impact and effectiveness, with corrective steps submitted to the council of ministers if needed.

As for the estimated cost, Keravnos said it stands at around €2 million based on available 2023 data, “because there is no other data at the moment”.