Cyprus and Greece Are Infringing EU Tax Law, Commission Warns

Cyprus must scale back a value-added tax break on new property purchases or face possible referral to the EU Court of Justice, the European Commission said Thursday.

EU law allows a reduced VAT rate to be applied to new homes if they qualify as social housing destined for buyers who would otherwise not be able to afford property, but Cyprus applies a 5% VAT rate on the first 200 square meters of any new house “regardless of the income, assets and economic situation of the beneficiary,” the commission said in a statement.

Cyprus, where the standard VAT rate is ...