Cyprus is a light-touch jurisdiction for rental income — and got lighter in 2026 when the Special Defence Contribution (SDC) on rents was abolished from 1 January 2026. The question every landlord then faces is the one this guide answers: do you hold the property personally or through a company? The two routes are taxed on completely different bases — an individual gets a flat 20% wear-and-tear deduction and the personal bands, while a company pays 15% on actual profit. This guide sets out both, the deductions, a worked example, and how to choose.
It pairs with our full Cyprus property tax guide, the Capital Gains Tax guide and the personal income tax guide. For the mechanism behind the abolished rent charge, see our SDC guide.
How is rental income taxed in Cyprus in 2026?
It depends entirely on the holder. An individual is taxed on rental profit under personal income tax (bands from a tax-free €22,000 up to 35%) plus GHS at 2.65%, but benefits from an automatic 20% deduction so only 80% of gross rent is taxable. A company includes rental profit in its taxable income and pays 15% corporate tax, deducting actual costs instead of the 20%. Either way, the old SDC on rent is gone from 2026.
So at the top level there are two layers for an individual — income tax and capped GHS — and a single 15% layer for a company (with the dividend rules biting only when profit is later distributed).
Individuals: income tax plus the 20% deduction
For an individual, rental income is part of personal taxable income, taxed as follows:
- 20% wear-and-tear deduction — a deemed deduction from gross rent on buildings, so only 80% of the gross rent is brought into charge before other deductions.
- Income tax on the resulting profit at the normal bands — the first €22,000 of total income is tax-free, then 20% / 25% / 30% / 35%.
- GHS at 2.65% on gross rent, capped where total income reaches €180,000.
- No SDC — the 3% SDC that used to apply to 75% of gross rent was abolished from 1 January 2026.
The 20% deduction is in addition to actual costs: an individual landlord can also deduct interest on a loan taken to acquire the property, insurance and maintenance, and capital allowances on the building. That combination is why an individual's taxable rental profit is usually well below the headline rent.
Allowable deductions: individual vs company
You are taxed on rental profit, not gross rent — but what counts as profit differs by holder. The most important distinction is the 20% deemed deduction: it is an individual measure only. A company gets no flat 20%; it deducts the actual expenses it incurs. The table below contrasts the two deduction regimes.
| Deduction | Individual landlord | Company landlord |
|---|---|---|
| 20% wear-and-tear on gross rent | Yes — automatic on buildings | No — not available |
| Loan interest (to acquire/improve) | Yes | Yes (actual) |
| Insurance & maintenance/repairs | Yes | Yes (actual) |
| Capital allowances on the building | Yes | Yes |
| Basis of charge | Income-tax bands (0% to €22k, then 20–35%) | 15% corporate tax |
| SDC on rent | 0% (abolished 2026) | n/a |
Worked example: an individual landlord
The numbers make the mechanism concrete. Take a Cyprus tax-resident individual with €20,000 of gross annual rent from a building and, for simplicity, no other income.
Gross rent €20,000. The 20% wear-and-tear deduction removes €4,000, leaving €16,000. Say loan interest and maintenance total €3,000 — deduct those too, leaving taxable rental profit of €13,000. That sits entirely within the €22,000 tax-free band, so the income tax is €0. GHS is 2.65% on the gross rent (€20,000) = €530. With SDC abolished, the total Cyprus tax on this rent is just €530 — about 2.65% of gross.
Push the rent higher and income tax begins to apply above €22,000 of total income, but the 20% deduction keeps the taxable base low throughout. Suppose instead the gross rent were €40,000 with the same €3,000 of interest and maintenance: the 20% deduction removes €8,000, leaving €32,000, less €3,000 of costs gives a taxable rental profit of €29,000. The first €22,000 is still tax-free, so only €7,000 is taxed (at 20% = €1,400), and GHS is 2.65% of the €40,000 gross = €1,060. Total Cyprus tax of about €2,460 on €40,000 of rent — an effective rate near 6%. Model your own figures with the income tax calculator, remembering that any other income you have uses up the tax-free band first.
Run the €40,000 rent through a company and the picture changes. The company cannot claim the 20% deduction, so it is taxed at 15% on profit after actual costs only: €40,000 − €3,000 = €37,000, tax €5,550. If those profits are then drawn as a dividend, a non-dom shareholder adds only capped GHS and a domiciled shareholder adds 5% SDC. On these modest, lightly-geared numbers the individual route is clearly cheaper; the company only pulls ahead when actual interest and capital allowances on a larger or heavily financed portfolio exceed the flat 20%, or when profits are retained and reinvested rather than drawn.
The company route: 15% on actual profit
If a company owns the property, rental profit forms part of its taxable profit and is taxed at the 15% corporate rate. The company deducts actual expenses — interest, insurance, maintenance and capital allowances — but not the 20% deemed deduction, which is reserved for individuals. When the company later distributes the after-tax profit as a dividend, the shareholder's position follows the dividend rules: 0% SDC for a non-dom, 5% for a domiciled resident, plus only capped GHS.
Because of that, the better vehicle depends on financing and scale. A company can be efficient for a larger, geared portfolio (where actual interest and allowances exceed the flat 20%), for reinvesting rather than drawing income, or for holding property alongside other activities. An individual usually wins for a single property or modest rents, where the 20% deduction plus the €22,000 tax-free band can wipe out the charge entirely — as the example above shows.
Individual vs company at a glance
The choice is rarely about the headline rate alone — it is about the deduction base, what happens on distribution, and the eventual sale. The summary table below brings the threads together.
| Held by an individual | Held by a company | |
|---|---|---|
| Tax on rental profit | Income-tax bands (0% to €22k, then 20–35%) + 2.65% GHS | 15% corporate tax |
| 20% deemed deduction | Yes — only 80% of gross rent taxable | No — actual expenses only |
| SDC on rent | Abolished (0%) | n/a |
| On distribution | n/a (already personal) | Dividend rules apply (0% SDC non-dom / 5% domiciled) |
| Capital Gains Tax on sale | 20% on the gain | 20% on the gain |
| Best for | Smaller portfolios, lower other income | Larger or geared portfolios, reinvestment, mixed activities |
Non-resident landlords and the GHS cap
The treatment also turns on residence. A Cyprus tax resident individual is within both income tax and GHS on rental income. A non-resident who lets Cyprus property is taxable in Cyprus on that Cyprus-source rent under income tax (the property is here), but is generally outside GHS, which attaches to residents — so a non-resident landlord typically faces income tax on the 80% taxable base without the 2.65% GHS layer, subject to any double-tax treaty in their home country. The 20% wear-and-tear deduction and the actual-cost deductions still apply, because they are features of how Cyprus computes the rental profit rather than of residence.
For residents, remember the GHS is a cap, not a per-source charge: once your combined GHS-liable income (salary, rents, dividends and so on) reaches €180,000 in the year, no further GHS is due across everything. A landlord with substantial other income may therefore find the marginal GHS on rent is already absorbed by the cap. Confirm your residence position with our personal income tax guide before assuming the GHS applies.
Reporting and provisional tax
Rental income is declared on the annual personal income tax return (for individuals) or the company tax return, with the rents, the 20% deduction, interest, insurance, maintenance and capital allowances set out so the taxable profit is clear. Because rents are usually predictable, landlords with material rental profit may fall within the provisional (temporary) tax regime, paying the year's estimated tax in two instalments and settling any balance afterwards — under-estimating below the statutory threshold can trigger a surcharge, so the estimate should be realistic. Good bookkeeping through the year — logging each electronic rent receipt and every deductible cost — is what makes both the return and the provisional estimate straightforward and defensible if the Tax Department reviews them. Our tax compliance team handles this end to end.
The electronic-payment rule from 1 July 2026
A practical change every landlord and tenant should note: from 1 July 2026, rent must be paid electronically for it to be tax-deductible for the payer. Cash rent payments cease to be deductible from that date. For a business tenant this directly affects whether the rent expense can be claimed, so leases and payment arrangements should move to bank transfer or other traceable electronic methods well before the deadline. It does not change how the landlord is taxed on the rent received, but it changes the documentation everyone should keep.
Owning and selling: the wider picture
Rental tax is only one part of the property lifecycle. Cyprus has no annual property tax (the Immovable Property Tax was abolished from 2017), only modest municipal fees. On a future sale, 20% Capital Gains Tax applies to the gain on Cyprus immovable property regardless of whether an individual or a company holds it (after inflation indexation and, for individuals, the lifetime exemptions). That CGT symmetry means the rental-tax comparison above usually drives the ownership decision, not the exit charge — see the Capital Gains Tax guide and property tax guide for the full disposal picture.
Getting it right
For 2026, Cyprus rental income is taxed lightly: for individuals, the 20% wear-and-tear deduction plus the €22,000 band and capped GHS — with SDC now gone — can leave little or no tax on a single property; for companies, a flat 15% on actual profit that can suit larger or geared portfolios. The live decisions are choosing the right ownership vehicle, claiming every allowable deduction, and moving rent to electronic payment before 1 July 2026.
If you let property in Cyprus, talk to us — our tax compliance team handles the returns and our advisers model personal versus company ownership on your actual numbers. This is general information, not a personalised recommendation.