Rental Income Tax in Cyprus: 2026 Rates and Non-Dom Guide

Income Tax Rates on Rental Income (Residents)

Rental income for Cyprus tax residents is added to total annual income and taxed at the standard progressive income tax brackets. The same rates that apply to salary, business income and dividends (for domiciled residents) apply to rental profits.

Cyprus income tax brackets for 2026: 0% on income up to EUR 22,000. 20% on EUR 22,001 to EUR 32,000. 25% on EUR 32,001 to EUR 42,000. 30% on EUR 42,001 to EUR 72,000. 35% on income above EUR 72,000.

Rental income stacks on top of all other income. If you already earn EUR 30,000 in salary, your first EUR 10,000 of rental income is taxed at 20% (inside the EUR 22k-32k band) and any excess at 25%.

Special Defence Contribution (SDC) on Rental Income

SDC applies on rental income at a deemed rate: SDC = 75% × gross rent × 3% = 2.25% of gross rent. The 75% multiplier is a statutory deemed allowance for expenses. SDC is collected separately from income tax.

Example: EUR 12,000 gross annual rent. SDC = 75% × EUR 12,000 × 3% = EUR 270. This is in addition to income tax on the same income.

SDC is payable by the tenant if the landlord is not a Cyprus tax resident and the rent is paid to a non-resident. When a Cyprus company rents property, it must withhold SDC at source.

Non-Dom Exemption: 0% SDC on Rental Income

Non-Dom status removes the SDC entirely on rental income. This is one of the clearest financial benefits of Non-Dom for property investors: the 2.25% SDC saving applies to every euro of gross rent collected.

On EUR 60,000/year of gross rental income, the saving is EUR 1,350/year. Non-Dom status is valid for 17 years — giving a cumulative SDC saving of up to EUR 22,950 on the same property income.

Non-Dom does not exempt rental income from income tax. The progressive income tax brackets still apply. Only the SDC is removed.

Expense Deductions: The 20% Deemed Option

Cyprus allows a 20% deemed expense deduction on gross rental income without any receipts or substantiation. This is a statutory allowance that reduces taxable income for income tax purposes.

If your actual expenses are higher (mortgage interest, management fees, repairs, insurance, maintenance), you can deduct actual documented costs instead. The higher of 20% deemed or actual expenses applies, but you cannot combine them.

Note: the 20% deduction applies to income tax. SDC is calculated on 75% of gross rent regardless of expense deductions.

Non-Resident Rental Income Tax in Cyprus

Non-residents with Cyprus property income pay a flat 30% tax on net rental income (gross rent minus allowable deductions). This rate applies to the net figure after subtracting the 20% deemed deduction.

Example: EUR 20,000 gross rent. Net income after 20% deduction = EUR 16,000. Tax = EUR 16,000 × 30% = EUR 4,800.

Non-residents do not have a EUR 22,000 tax-free threshold on rental income unless they elect to be taxed under the normal progressive income tax rules, which can sometimes be more favourable.

GHS Contributions on Rental Income

General Health System (GHS/GESY) contributions apply to rental income. The rate is 2.65% for employees and domiciled residents. Self-employed rate 4.70% does not apply to rental income — only to self-employment profits. GHS is capped when total insurable income exceeds EUR 180,000/year.

How to File and Pay Tax on Rental Income

Cyprus rental income is reported on the annual income tax return (Form TD1). The filing deadline is 31 March of the following year (electronic filing). SDC on rental income is payable in two equal instalments: 30 June and 31 December.

If your annual income (including rental) is below EUR 22,000, you are not required to file a tax return unless your employer has not fully withheld the correct income tax.