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.

Short-Term Rental Income (Airbnb) and the 3% SDC Trap

Short-term rentals through platforms like Airbnb, Booking.com, or direct holiday lets are treated as rental income for Cyprus tax purposes, not business income, provided you are not operating at a commercial scale with significant services (cleaning, meals, concierge). This means the same income tax progressive bands apply: 0% on the first EUR 22,000, then 20-35% above that. SDC at the effective rate of 2.25% (calculated as 75% of gross rent × 3%) applies to domiciled residents. Non-Dom residents pay no SDC regardless of how many properties they list.

The critical practical difference with short-term lets is VAT. If your total short-term rental turnover (across all properties) exceeds EUR 15,600 in any 12-month period, you are required to register for Cyprus VAT and charge 9% VAT on accommodation (the reduced hospitality rate, not the 19% standard rate). This threshold is identical to the one applied to hotels and tourist accommodation. Long-term residential rentals, leases of 30+ days, remain VAT-exempt with no threshold to worry about. Mixing short-term and long-term lets on the same property in the same year requires careful allocation.

Owners listing on Airbnb should also note that the platform now withholds and remits VAT in many EU jurisdictions under the deemed supplier rules, but Cyprus implementation details should be confirmed with a local accountant each year as the rules are evolving. Regardless of any platform withholding, you remain personally liable for Cyprus income tax and GHS (GESY) contributions of 2.65% (capped at EUR 180,000 of passive rental income per year). Practical tip: if your Airbnb income is seasonal and your annual gross stays under EUR 15,600, you avoid the VAT registration requirement entirely while still benefiting from the 20% deemed expense deduction on your net taxable amount.

Commercial Property Rental Income: Different Rules, Same Rates

Renting out commercial property, offices, warehouses, retail units, land, follows the same income tax rate schedule as residential letting. The progressive bands (0% / 20% / 25% / 30% / 35%) and the 20% deemed expense deduction all apply identically. However, SDC applies at the same 2.25% effective rate for domiciled residents, calculated on 75% of gross commercial rent. Non-Dom residents remain exempt from SDC here as well. One structural difference: commercial tenants are legally required to withhold 10% of each rent payment at source and remit it directly to the Tax Department on behalf of the landlord (under TD4 withholding rules). This is not an additional tax, it is simply a prepayment against your annual income tax liability, offset when you file your TD1 return.

VAT is a much more significant issue for commercial landlords than residential ones. Commercial property rentals are VAT-exempt by default under Cyprus VAT law, which sounds beneficial but carries a real cost: if you paid input VAT on construction, renovation, or refurbishment of the property, you cannot reclaim it when the rental income is exempt. To solve this, you can make an irrevocable election to opt into VAT on the commercial rental, charging your tenant 19% VAT on rent. This lets you recover all input VAT on the building's costs. The election makes economic sense when your tenant is a VAT-registered business (they simply reclaim the VAT themselves), but is counterproductive when tenanting to non-VAT-registered businesses or retail operations that cannot reclaim.

Owners holding commercial property through a Cyprus company rather than personally face a different set of numbers. The company pays 15% corporate tax on net rental profit (after actual deductible expenses, no fixed 20% deemed deduction, actual expenses only). There is no SDC at the corporate level. The company then pays a 2.65% GHS levy on the rental income it receives, capped at EUR 180,000. When the after-tax rental profit is eventually distributed to shareholders as a dividend, a Non-Dom shareholder pays only 2.65% GHS on dividends (no SDC, no income tax). The total effective rate on rental income flowing through a Cyprus company to a Non-Dom shareholder is roughly 17-18%, which is typically higher than the personal Non-Dom route for moderate income levels but can be advantageous when profits are retained in the company rather than distributed.

Overseas Rental Income: What Cyprus Tax Residents Owe on Foreign Property

If you are a Cyprus tax resident, whether under the standard 183-day rule or the 60-day rule, Cyprus taxes your worldwide income, including rental income from property located outside Cyprus. A flat from Barcelona, a buy-to-let in London, a holiday villa in Greece: all must be declared on your Cyprus TD1 annual return. You report the gross foreign rental income, deduct actual expenses (or, where elected, the 20% deemed deduction), and pay Cyprus income tax at the same progressive rates. GHS contributions of 2.65% apply on top, again capped at EUR 180,000 of total passive income.

Double taxation is addressed by Cyprus's network of over 65 tax treaties. In most cases, the country where the property is located has primary taxing rights on rental income from real estate situated there. Cyprus then grants a credit for the foreign tax actually paid, preventing you from being taxed twice on the same income. For example, if you earn EUR 20,000 net rent from a UK flat and the UK charges 20% tax (EUR 4,000), Cyprus calculates the tax due on that income under its own rates and credits the EUR 4,000 against it. You pay the higher of the two countries' rates, not both. Keep all foreign tax receipts and assessment notices, the Cyprus Tax Department requires documentary evidence of tax paid abroad to grant the credit.

SDC presents an important nuance for domiciled Cyprus residents. SDC on rental income applies at 2.25% (effective) and is levied on rental income from property located anywhere in the world, not just Cyprus. There is no treaty relief for SDC, it is a domestic Cyprus levy, not an income tax for treaty purposes. Non-Dom residents escape this entirely, which is one reason the Non-Dom regime is so attractive for property investors: a Non-Dom resident with a rental portfolio spanning multiple countries pays only Cyprus income tax (above EUR 22,000 at progressive rates), 2.65% GHS, and whatever taxes are due locally in each property's country, no SDC layered on top.

Declaring Rental Income: TD1 Deadlines, Provisional Tax, and Common Mistakes

Rental income in Cyprus is declared on Form TD1 (the individual income tax return). The filing deadline for the prior tax year is 31 July of the following year when submitting via the TAXISnet online portal (paper filing deadline is 30 April, but virtually everyone files online). So 2026 rental income is declared by 31 July 2027. SDC on rental income follows a separate self-assessment cycle: it is due in two equal instalments on 30 June and 31 December of the same year in which the rental income is earned, based on your estimate. Under-declaring SDC can trigger penalties and interest (currently 1.75% per month on unpaid amounts, which compounds quickly).

Provisional income tax payments are required if your income from non-employment sources, including rental income, exceeds EUR 5,000 in a year. You submit a provisional tax return (TD5) and pay in two instalments: 31 July and 31 December of the tax year. The provisional payment must be at least 75% of the prior year's final tax liability to avoid an underpayment surcharge. Many first-year Cyprus residents with rental portfolios are caught off-guard by this: they expect to pay tax in arrears after filing, but Cyprus requires in-year payments. Set calendar reminders for both instalment dates.

The most common mistakes on rental income declarations include: (1) failing to declare overseas rental income at all, incorrectly assuming only Cyprus-source income is taxable; (2) applying the 20% deemed deduction and also claiming actual mortgage interest, the deemed deduction is in lieu of all expenses, you cannot mix both; (3) not registering for GHS and therefore accumulating unpaid GESY contributions, which are separately administered by the Health Insurance Organisation (HIO) rather than the Tax Department; (4) missing the SDC self-assessment dates while correctly filing TD1, resulting in late payment surcharges even though the income tax return itself was on time. Keeping rental income in a dedicated bank account and booking a quarterly review with a local tax adviser before each instalment date is the simplest way to stay compliant.

Worked Examples: Your Rental Tax Bill at EUR 15k, EUR 30k, and EUR 60k

Example A, EUR 15,000 gross rental income (Non-Dom resident, no other income). Apply 20% deemed deduction: taxable income = EUR 12,000. This falls entirely within the 0% band (below EUR 22,000 threshold). Income tax = EUR 0. GHS: 2.65% × EUR 15,000 = EUR 397.50. SDC: Non-Dom, so EUR 0. Total annual tax burden: EUR 397.50, an effective rate of 2.6%. This is the cleanest scenario and illustrates why Cyprus is highly competitive for small buy-to-let investors.

Example B, EUR 30,000 gross rental income (Non-Dom resident, no other income). After 20% deemed deduction: taxable income = EUR 24,000. Income tax: 0% on first EUR 22,000 = EUR 0; 20% on EUR 2,000 (EUR 24k minus EUR 22k) = EUR 400. Total income tax = EUR 400. GHS: 2.65% × EUR 30,000 = EUR 795. SDC: Non-Dom, so EUR 0. Total: EUR 1,195. Effective rate on gross rent: 3.98%. Now compare this to a domiciled Cyprus resident on the same EUR 30,000: they add 2.25% SDC = EUR 675 more, bringing their total to EUR 1,870 (6.2% effective rate).

Example C, EUR 60,000 gross rental income (Non-Dom resident, no other income). After 20% deemed deduction: taxable income = EUR 48,000. Income tax: 0% on EUR 22,000 = EUR 0; 20% on EUR 10,000 (EUR 22k-32k) = EUR 2,000; 25% on EUR 10,000 (EUR 32k-42k) = EUR 2,500; 30% on EUR 6,000 (EUR 42k-48k) = EUR 1,800. Total income tax = EUR 6,300. GHS: 2.65% × EUR 60,000 = EUR 1,590. SDC: Non-Dom, so EUR 0. Total: EUR 7,890. Effective rate on gross rent: 13.15%. For a domiciled resident at this level, SDC adds 2.25% × EUR 60,000 = EUR 1,350, bringing total tax to EUR 9,240 (15.4% effective). These examples use rental income only; if you also have employment or other income, it stacks within the same progressive bands, which can materially increase the marginal rate on the rental portion.

Related Guides

Complete Tax Guide for Landlords in Cyprus [2026]

Rental Income Tax Rates in Cyprus: GESY Withholding, SDC & Non-Dom