Rental and property income tax in Southern Cyprus
💰 Basic Information
Rental income from property in Southern Cyprus is subject to Income Tax under the laws of the Republic of Cyprus.
Taxation depends on the owner’s tax residency, type of rental (short-term / long-term), and the amount of net income.
Cyprus has one of the lowest effective tax rates in the EU and offers many exemptions and reliefs for property owners.
1️⃣ Who is a tax resident
A person becomes a tax resident of the Republic of Cyprus if they meet:
| Rule | Conditions |
|---|---|
| 60-day rule | Stay at least 60 days in the year, do not perform activities in another state, own a property and have permanent residence in Cyprus |
| 183-day rule | Stay at least 183 days per year |
💡 Residents pay tax on worldwide income.
Non-residents pay tax only on income derived from Cyprus (e.g., rental of property in Cyprus).
2️⃣ Types of rental and tax treatment
| Rental type | Description | Taxation |
|---|---|---|
| Long-term rental | Residential, usually 6–12 months | Income tax according to rates |
| Short-term rental (Airbnb, Booking) | Tourist rentals | Income tax + VAT if threshold is exceeded |
| Commercial rental (offices, shops) | Rental for business purposes | Income tax + contributions depending on legal form |
3️⃣ Calculation of rental tax
Tax is calculated on net income = rental income – expenses (e.g., management, repairs, insurance, service charges).
Tax brackets (2025):
| Annual net income | Tax rate |
|---|---|
| up to €19,500 | 0 % |
| €19,501 – 28,000 | 20 % |
| €28,001 – 36,300 | 25 % |
| €36,301 – 60,000 | 30 % |
| above €60,000 | 35 % |
💡 Most ordinary owners (with 1–2 apartments) do not exceed €19,500 per year → 0 % tax.
4️⃣ Example calculation
Rental income: €1,200/month = €14,400/year
Expenses (management, maintenance): €1,000/year
Net income = €13,400 → Tax = €0
If net income were €25,000, tax would be calculated as:
19,500 × 0 % = 0 €
5,500 × 20 % = 1,100 €
➡️ Tax = €1,100/year
5️⃣ Turnover and VAT on rentals
- Long-term rental (residential) = VAT exempt
- Short-term rental (up to 30 days, tourist) = may be subject to 9 % VAT if annual turnover exceeds €15,600
- VAT registration requires keeping accounts and issuing invoices
💡 In practice, most ordinary landlords fall below this threshold → no VAT
6️⃣ Contributions (Social Insurance and GESY)
- If the landlord is not registered as a business (self-employed or company), no contributions on rental profit – only income tax applies
- For corporate rentals (e.g., LTD), contributions depend on company type
7️⃣ Double Taxation
- Cyprus has agreements to avoid double taxation with most EU countries (including Slovakia, Czechia, Hungary, Poland, Austria, etc.)
- This means rental income is not taxed twice – if taxed in Cyprus, it is credited in the home country
8️⃣ Rental registration
Every landlord should:
- Have a signed rental agreement,
- Register it (for long-term rentals) at the District Land Office,
- File annual tax return by July 31 of the following year
9️⃣ Short-term rental (Airbnb, Booking)
- Must be registered with the Deputy Ministry of Tourism (DMT)
- A license number is required for online listings
- VAT must be paid if turnover > €15,600
- Fines for illegal rentals: €500 – €5,000
