Cyprus has long been an attractive location for property investors, because of its favourable tax framework. Whether you are renting out property long-term or short-term through platforms like Airbnb or Booking.com, understanding how rental income is taxed in Cyprus is important. With the proper setup, you can maximise your yields while minimising taxation.
In this guide, we provide a detailed breakdown of rental taxes in Cyprus for both individuals and companies. We will cover key tax obligations, exemptions, refunds, and strategies to reduce your tax liability.
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How is Rental Income Taxed in Cyprus? In Cyprus, your rental taxation depends on three factors: your tax residency, the type of rental agreement, and if the property is owned by an individual or a company.
Each of these factors determines how much tax you’ll pay, what kind of taxes apply, and whether you qualify for any exemptions.
Cyprus tax residents must declare their worldwide property income.Non-residents are taxed only on income from properties located in Cyprus.Individuals are taxed progressively (0–35%), based on their total income.Companies pay a flat 12.5% corporate tax on net property income.The tax treatment also differs depending on whether you rent your property long-term or short-term:
Long-term residential rentals are exempt from VAT.Short-term rentals of less than 30 days via platforms like Airbnb or Booking.com are subject to VAT if annual earnings exceed €15,600.Rental Income Tax Overview Table
Here’s a quick comparison of how property income is taxed in Cyprus depending on your setup:
Type of Rental
Taxpayer
Tax Type(s)
Rate(s)
Additional Notes
Long-term
Individual
Income Tax, SDC, GHS
Progressive (0–35%) + SDC 3% + GHS 2.65%
20% wear & tear, SDC exemptions for non-doms
Short-term (under 30 days)
Individual
Income Tax, VAT, GHS
Progressive (0–35%) + GHS 2.65% + 9% VAT if > €15,600
Must register for VAT & tourism licence
Long-term
Company
Corporate Tax, SDC
12.5% + SDC 3% on 75% (if not exempt)
More deductions than individuals
Short-term (under 30 days)
Company
Corporate Tax, VAT
12.5% + 9% VAT if > €15,600
No SDC, must register for VAT & tourism licence
Rental Income Tax for Individuals in Cyprus Personal Income Tax on Rent Individuals must include income from rent in their total taxable earnings. How much you pay depends on your overall income bracket. This means your rental earnings are taxed progressively and combined with other types of income, such as employment salary and taxed accordingly.
Here are the 2025 personal income tax brackets in Cyprus:
Income Bracket (€)
Tax Rate (%)
0 – 19,500
0
19,501 – 28,000
20
28,001 – 36,300
25
36,301 – 60,000
30
60,001+
35
But if you already earn €35,000 in salary, and then earn €30,000 from rentals, your total taxable income becomes €65,000. This pushes parts of your property income into the highest bracket (35%), making personal ownership less tax-efficient.
Special Defence Contribution (SDC) on Rental Income Under Cyprus tax law, rental income earned by individuals is subject to the SDC. It applies to 75% of your gross rental income, taxed at a flat rate of 3%.
Example Calculation:
Rental income: €20,000 75% subject to SDC: €15,000 3% of €15,000 = €450 SDC payable Exemption: If you are non-domiciled tax resident of Cyprus or a non-resident, you are exempt from SDC.
General Healthcare System (GHS) Contribution on Rent In addition to income tax and SDC, property earnings are subject to a 2.65% contribution to the GHS. The GHS is capped at €4,770 for annual incomes up to €180,000. Any income above that threshold is not subject to GHS contributions.
Deductible Expenses for Individuals To lower your taxable rental income, individuals can deduct several expenses, including:
20% wear and tear deduction on gross earnings. Maintenance and repair costs are deductible, but only if they are supported by official invoices Insurance premiums related to the rental property. Mortgage interest payments, provided the loan was used to purchase or renovate the property. Property management fees for professional rental services By effectively using these deductions, landlords can reduce their taxable income while staying compliant with Cyprus tax law
Rental Income Tax for Companies in Cyprus Corporate Tax Companies in Cyprus are taxed at a flat corporate tax rate of 12.5% on their net rental profits. Companies can also deduct expenses for their property. This includes loan interest, maintenance costs, insurance, and other approved expenses, just like people do.
Special Defence Contribution for Companies In general, companies are subject to defence on rent in Cyprus at 3% on 75% of their gross rental income. However, there is an important exception:
Short-term rentals, such as Airbnb or Booking.com listings, are treated as business income. These are not subject to SDC and are taxed only at the 12.5% corporate tax rate. Deductible Expenses for Companies Companies can deduct a wider range of expenses than individuals, including:
Interest on property-related loans Property maintenance and repairs Property management fees Insurance costs Depreciation on buildings and improvements (particularly useful for new developments or renovations). By leveraging these deductions, companies can significantly reduce their taxable profits. The corporate route is a good choice for anyone managing several properties or high-value investments.
Tax on Short-Term Rentals in Cyprus If you lease out property in Cyprus short-term, like on Airbnb or Booking.com, the tax rules change. They differ from long-term leases and involve extra compliance obligations. These include:
VAT Rules
Long-term rentals are exempt from VAT.Short-term rentals (under 30 days) are subject to 9% VAT if your annual rental income exceeds €15,600. Once you pass this threshold, you must register for VAT with the Cyprus Tax Department. This VAT should be clearly stated on rental invoices or receipts issued to tenants.Tourism Registry Requirement
In addition to VAT registration, short-term rental hosts must register their property with the Deputy Ministry of Tourism. Not registering can lead to fines, back taxes, and a temporary suspension to rental activity.
How to Reduce Your Rental Income Tax in Cyprus Reducing your tax burden is quite straightforward if you take the right steps. Here’s a four-part strategy that many landlords and investors use to lower their tax bills while staying legally compliant.
1. Use a Company Structure The 12.5% corporate tax rate in Cyprus is significantly lower than the top 35% personal tax rate that applies to high earners. By operating through a company, you not only benefit from a flat rate but also gain access to more deductible expenses.
This structure is especially useful if you:
Own multiple properties. Earn a high rental income. Plan to reinvest profits. Want to explore this option? Check out our step-by-step guide to registering a company in Cyprus
2. Utilise Non-Domicile Tax Benefits If you're a non-domiciled tax resident, you're exempt from paying Special Defence Contribution on dividends. This creates an efficient setup: rental income is taxed at the corporate level, then distributed to you tax-free as dividends.
Not sure if you qualify? Read our complete guide to the Cyprus non-dom regime
3. Plan for VAT on Short-Term Rentals If you run a short-term rental business (e.g. Airbnb), you'll need to register for VAT once your revenue exceeds €15,600 per year. Proactive planning helps you:
Stay compliant. Avoid back taxes or penalties. Optimise VAT deductions where possible. 4. Consult a Tax Expert Cyprus tax law is quite friendly for investors, yet it remains a complex subject. This complexity arises in areas like ownership structure, claiming deductions, and dealing with VAT, GHS or SDC. Consulting a qualified tax expert can help you:
Stay fully compliant. Identify the best ownership structure for your situation. Legally reduce your total tax liability. At Clover, we offer tailored advice and end-to-end support. Book a free consultation
Conclusion Understanding how rental income is taxed in Cyprus is essential if you want to maximise profits and avoid costly mistakes. By having the right ownership structure and using deductions wisely, you can lower your tax bill. Careful planning helps you do this while following local laws.
Need help navigating the process? Our team provides expert help with our Real Estate Investment Service in Cyprus
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