Rental Income Taxation for Individuals in Cyprus – 2025 Guide
Rental income in Cyprus is a common source of revenue for many individuals. However, it is essential to understand that this income is subject to multiple tax obligations depending on your residency status, income level, and type of tenant. This article outlines the current 2025 rules and responsibilities for individuals earning rental income in Cyprus, based on official guidance from the Ministry of Finance of the Republic of Cyprus.
1. Income Tax on Rental Income
If your total annual gross income, including rental income and any other earnings (e.g., salary, pensions, dividends), exceeds €19,500, you are liable to pay income tax on the full amount. This applies to both Cypriot nationals and resident foreign individuals.
Rental income is aggregated with your other income sources for the purpose of calculating your total taxable income. Cyprus operates a progressive tax system, and the applicable tax rates will depend on your total income level.
2. Special Defence Contribution (SDC)
If you are a Cyprus tax resident and domiciled individual, you are also subject to the Special Defence Contribution (SDC) on rental income. The SDC is calculated at 3% on 75% of the gross rental income, regardless of whether your total income exceeds the income tax threshold.
How and When to Pay SDC:
• If your tenant is an individual, you must file a self-assessment return and pay the SDC twice per year, by 30 June and 31 December.
• Use payment code 604 when submitting your payment.
• If your tenant is a company, the company is responsible for withholding and remitting the SDC directly to the Tax Department.
• The company uses payment code 614.
3. GeSY (General Healthcare System) Contribution
Rental income is also subject to the GeSY contribution, which supports the national healthcare system in Cyprus. The applicable rate is 2.65% on the gross rental income.
Important: GeSY contributions do not apply if the owner of the property is a legal entity (i.e., a company). They apply only to individuals.
GeSY Payment Process:
• If your tenant is an individual, you are required to self-assess and pay GeSY twice a year, on 30 June and 31 December.
• Use payment code 704.
• If your tenant is a company, the company will deduct and pay GeSY on your behalf.
• The applicable payment code is 714.
4. VAT on Rental Income
In some cases, rental income may also be subject to Value Added Tax (VAT). This applies if:
• The lessee (tenant) is VAT-registered and carries out taxable business activities, and
• The lease relates to commercial property.
The applicable VAT rate is 19%.
Exemption from VAT:
Landlords may opt for VAT exemption on leasing income. However, it is critical to note that once this exemption is granted, it is permanent and irrevocable. This decision should be considered carefully in consultation with a professional tax advisor.
Further information regarding VAT on rental income is detailed in Circular 220 issued by the Tax Department of Cyprus.
Need Help With Your Rental Income Tax Obligations?
If you’re an individual earning rental income in Cyprus, our team of qualified accountants and tax consultants can help you manage your tax obligations efficiently and on time. We assist with income tax filings, SDC and GeSY declarations, and VAT registration or exemption applications.
Contact us today to ensure you stay compliant and optimise your rental income returns.
📍 Based in Limassol | Serving all of Cyprus
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