If you own property in Cyprus — or are thinking about buying as part of a relocation plan — the rental income tax rules matter more than most guides cover. The rate depends not just on how much rent you earn, but on your residency status, your other income, and whether you hold Non-Dom status.
Here's what the 2026 numbers actually look like.
Progressive Tax on Rental Income (Residents)
Cyprus taxes rental income from residents at the same progressive income tax brackets as salary and business income:
| Annual income (EUR) | Tax rate |
|---|---|
| 0 - 22,000 | 0% |
| 22,001 - 32,000 | 20% |
| 32,001 - 42,000 | 25% |
| 42,001 - 72,000 | 30% |
| 72,001+ | 35% |
The 0% threshold was raised to EUR 22,000 in the December 2025 tax reform (up from EUR 19,500 previously).
This is the critical point: rental income stacks on top of your other income. If you earn EUR 25,000 from employment and EUR 15,000 from rental, the rental income is calculated at your marginal rate, not independently. The full EUR 15,000 lands in the 20% bracket, not the 0% band.
For someone with only rental income — no salary — EUR 30,000 in annual rent breaks down as: 0% on the first EUR 22,000, and 20% on EUR 8,000 = EUR 1,600 income tax. Manageable. Add a salary on top and the numbers change fast.
GHS Contribution
Separately from income tax, a 2.65% GHS healthcare contribution applies to rental income. This is paid regardless of residency status if you receive Cyprus-sourced rental income.
Special Defence Contribution (SDC): Who Pays It
SDC is the layer that catches most people off guard. The formula:
SDC = 75% × gross rental income × 3% = 2.25% of gross rent
The 75% multiplier is a deemed expense allowance baked into the calculation — so you don't need to prove costs, it's just 2.25% on gross rent every year, before income tax deductions.
Example: EUR 12,000 annual rent → SDC = EUR 270. Due even if the property generates a net loss for income tax purposes after deductions.
Who pays SDC on rental income?
- Cyprus tax residents who are domiciled in Cyprus: yes (2.25% of gross rent)
- Cyprus Non-Dom status holders: fully exempt from SDC for up to 17 years
- Non-residents (not Cyprus tax resident): no SDC on Cyprus rental income
The Non-Dom exemption is permanent for the duration of the 17-year window. If you establish Non-Dom status in 2026, SDC on rental income does not apply through 2043.
Non-Resident Landlords: Flat 30%
If you own Cyprus property but are not a Cyprus tax resident, the tax treatment is completely different: a flat 30% rate on gross rental income applies, with no allowance for the progressive bands or personal exemption.
This is why many overseas investors who own Cyprus property eventually shift to establishing Cyprus tax residency via the 60-day tax residency rule. Once you qualify as a tax resident (60 days minimum, with no other country tax residency), you access the progressive bands instead of the flat 30% — and potentially the 0% band if rental income stays below EUR 22,000.
Allowable Deductions for Residents
Cyprus residents can reduce taxable rental income with the following deductions:
- 20% flat maintenance allowance on gross rent (no receipts required)
- Mortgage interest on the rental property
- Depreciation: 3% of the property's original cost per year for residential; 4% for commercial
- Property-related insurance premiums
The 20% maintenance allowance is the simplest lever. On EUR 15,000 gross rent, you deduct EUR 3,000 automatically, leaving EUR 12,000 of taxable rental income before applying your income tax bracket.
Practical Example: Non-Dom Founder with Rental Property
Scenario: Non-Dom Cyprus resident, EUR 80,000 in dividends (taxed at 2.65% GHS only), and EUR 18,000 annual rental income from a Limassol apartment.
- Rental taxable income after 20% deduction: EUR 14,400
- EUR 14,400 stacks on dividend income for income tax purposes — but dividends are outside the income tax base for Non-Dom, so rental income is assessed alone
- Tax on EUR 14,400: 0% (under EUR 22,000 threshold)
- GHS on rental: 2.65% × EUR 18,000 = EUR 477
- SDC: 0% (Non-Dom exemption)
- Total tax on EUR 18,000 rental income: EUR 477 (~2.65% effective)
Compare that to the same property owned by a non-resident: 30% × EUR 18,000 = EUR 5,400.
The residency decision, specifically the Yellow Slip guide registration process for EU citizens, is the prerequisite for accessing any of the resident-side advantages above.
Summary
| Scenario | Effective tax on EUR 18k rental |
|---|---|
| Non-resident | ~30% (flat, gross) |
| Resident, domiciled | ~2.25% SDC + income tax at bracket |
| Resident, Non-Dom | ~2.65% GHS only (income tax 0% if under threshold) |
For the full deduction schedule, SDC calculation examples, and the filing deadlines for rental income, see the complete rental income tax guide for Cyprus.
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