CYPRUS PROPERTY TAX
Cyprus taxation is connected to the acquisition & holding of immovable property
A. Taxes in relation to the acquisition of property
The following taxes/fees are applicable upon the acquisition of immovable property in Cyprus:
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Land transfer fees:
The above transfer fees do not apply if the transaction is subject to VAT (refer to section A.3 below). -
Transfer Fee
Transfer of the ownership right from the developer to the buyer is accompanied by property registration tax paid by the buyer to the state, a so-called Transfer Fee. Transfer Fee is calculated based on the contract value of the real estate using the following scheme:
Transfer Fee calculation
Real Estate Price Commission Fee
under EUR 85.000 3%
from EUR 85.001 to EUR 170.000 5%
over EUR 170.001 8%
Transfer fee is calculated in the same way as in transactions on the secondary property market, i.e. every time the real estate title is transferred from one owner to another.
**Important Note (Effective January 2026):** Transfer Fees are reduced by 50% when the transaction is not subject to VAT (such as resale properties). This makes buying a resale property an attractive option for those looking for lower transaction costs.
3. VAT
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New properties are subject to VAT at 19% on their sale irrespective if the purchaser is a legal entity or a natural person.
The only exception to this rule is if the building permit was granted before 1st May 2004, then the said new property is exempt from VAT. Nowadays, very few such new properties exist in the market.
Resale properties are exempt from VAT, hence subject to Land Transfer Fees as described in section A.1 above.
In the case of the buyer's main residence (assuming that this is not rented out), the buyer can apply for a reduced VAT of 5%, subject to the following conditions:
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The reduced rate of VAT is 5% and is applied only if the property will be the buyer's main and permanent residence in the Republic of Cyprus.
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The reduced 5% VAT rate applies only to the first 130 m² of the buildable residential area, with a maximum property value of €350,000 for the reduced rate.
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The total buildable residential area must not exceed 190 m², and the total transaction value must not exceed €475,000. Anything exceeding these limits is subject to the standard 19% VAT.
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If the owner disposes of the property or it ceases to be used as the main residence within 10 years from the date of purchase, the tax authorities may reclaim the difference between the 19% and 5% rates, proportionate to the remaining years.
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For persons with disabilities, the reduced rate applies up to 190 m², while the price ceiling remains the same (€350,000).
**Transitional Period:** Properties with building permits or applications submitted before 31 October 2023 may still qualify under the old scheme (5% VAT on first 200 m²), provided the application for the reduced VAT is lodged by 15 June 2026.​
B. Taxes in relation to owning property
The owners of immovable property in Cyprus are subject to various taxes arising from the mere ownership of immovable property in Cyprus.
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Local Authority Fees
Depending on the size of the property, the local authorities charge between €85 to €256 per annum for regular refuse collection, street lighting, sewerage and similar community services. Communal Services fees are payable to the local municipal authorities on annual basis during the period from October to December. -
Municipality tax
As the registered owner of the property, you are required to pay an annual Municipality Tax, calculated on the market value of the property as at 1st of January 1980. Rates vary from 0.001‰ – 0.002‰. Municipality tax is payable to your local municipal authority. -
Sewerage Tax
As the registered owner of the property, you are required to pay an annual Sewerage Tax, calculated on the market value of the property as at 1st of January 1980. Rates vary from 0.03‰ – 0.035‰. Sewerage taxes are payable annually to your local sewerage board.
C. Taxes in relation to renting property
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Rental income received in Cyprus (from immovable property situated in Cyprus) is considered, for Cyprus tax purposes, as “Cyprus-sourced income” and as a result is subject to Personal Income Tax and General Healthcare System contributions, irrespective if the owner is tax resident in Cyprus. Depending on the tax residency and domicile status of the owner, rental income may also be subject to Special Defence Contribution.
If the property is being rented out, the local authority fees and the sewerage tax (described in section B above) can be potentially passed on to the tenant.
The earning of rental income from properties located in Cyprus will give rise to the following tax implications:
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VAT
As from 13 November 2017, the renting/leasing of immovable property to a taxable person who will carry out taxable activities from the property is subject to VAT at the standard rate of 19%, provided that the said rental income surpasses the VAT registration threshold (currently at EUR 15,600 over a 12-month period).
The rental of residential properties and properties where the tenant will not use them to carry out taxable activities are exempt from VAT.
The owner of the property has the option to irrevocably exempt (by submitting the relevant form to the Tax Authorities) a specific property’s rents from VAT, however in such a case the owner will not be able to reclaim any input VAT suffered on the purchase of the said property or on any ongoing maintenance expenses -
Special Defence Contribution ("SDC") on rental income **As of 1 January 2026, the Special Defence Contribution (SDC) on rental income has been abolished.** Rental income continues to be subject to Personal Income Tax and GHS contributions as described below.
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Income tax
As mentioned above, rental income received in Cyprus (from immovable property situated in Cyprus) is considered, for Cyprus tax purposes, as “Cyprus-sourced income” and hence subject to Personal Income Tax (PIT).
​Out of the gross rental income received:
There is a statutory reduction of this income by 20%, and the owner is entitled to claim an annual deduction of 3% against the cost of acquisition/construction of the building (excluding the cost of the land) for a period up to 33 years from the year the property was constructed.
The net amount is taxable under PIT at the following rates
Personal Income Tax Rates (Effective 1 January 2026):
• 0% on income up to €22,000 (increased from €19,500)
• 20% on income from €22,001 to €32,000
• 25% on income from €32,001 to €42,000
• 30% on income from €42,001 to €72,000
• 35% on income exceeding €72,001 -
General Healthcare System (“GHS”)
As mentioned above, rental income received in Cyprus (from immovable property situated in Cyprus) is considered, for Cyprus tax purposes, as "Cyprus-sourced income" and is subject to GHS contributions at 2.65% on the gross amount of rental income.
GHS contributions apply to both Cyprus tax residents and non-residents, regardless of domicile status. The contribution is calculated on total annual income from all sources up to a maximum cap of €180,000.
In the case where the tenant is a legal entity, the tenant is obliged to withhold at source the GHS amount and pay it to the Tax Department on a monthly basis -
Personal tax compliance
Individuals earning rental income must register to the tax authorities and submit their annual personal income tax returns and where applicable their quarterly VAT returns. The following is a short summary of the actions required:-
Registration with the tax authorities to obtain Tax Identification Code and also register for VAT purposes (where applicable).
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Submission of quarterly VAT returns and payment of any related VAT liability, in the case where the rents received are subject to VAT (as per section C.1 above).
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Submission of the annual personal income tax return (IR1 form). The deadline to submit the IR1 form is 7 months after the year end.
If the annual rental income exceeds EUR 70,000, the individual will have to maintain proper books and records on the basis of which annual accounts must be prepared in accordance with IFRS, which must be audited by a licensed auditor in Cyprus, in such a case the deadline for submission of the audited iR1 form is 15 months after the year end. -
Payment of personal income taxes and GHS contributions not withheld at source: the respective liabilities have to be paid to the authorities via provisional tax declarations, submitted on 31 July and 31 December each year.
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​**Important Note (Effective 1 July 2026):** All rental payments exceeding €500 per month must be made exclusively via bank transfer, credit/debit card, or other electronic means. Cash payments for rent are prohibited and can result in fines of up to €5,000 for both landlord and tenant.