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% deemed building-expense 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% deemed building-expense 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 replaces actual repairs and related maintenance costs for the building; do not claim those costs twice. Separately eligible acquisition-loan interest and capital allowances may also be deducted, subject to the statutory conditions. 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% deemed deduction on building rent | Yes — automatic on buildings | No — not available |
| Loan interest (to acquire/improve) | Yes | Yes (actual) |
| Repairs and related maintenance | Covered by the 20% deduction; do not deduct twice | 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% deemed building-expense deduction removes €4,000, leaving €16,000. Say eligible acquisition-loan interest totals €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 eligible acquisition-loan interest: 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 shareholder may have further GHS or SDC obligations depending on residence, domicile, dividend year and transitional rules. This simplified example does not establish which ownership route is cheaper for a real investor; compare other income, actual costs, compliance and eventual distribution.
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 an eligible non-dom, generally 5% for a domiciled resident on 2026-and-later profits, plus applicable GHS; older profits have transitional rules.
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. Personal ownership may be attractive for a single property where the owner has little other taxable income, but the example does not decide the position for someone with salary or other income.
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 letting Cyprus property can still face Cyprus tax on that Cyprus-source rent. Do not infer the GHS position from tax residence alone: check whether the individual is liable under the GHS rules and any applicable exemption, as well as the treaty and home-country position. The 20% deemed building-expense deduction and separately eligible interest and capital allowances 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 the individual's GHS and tax position, including any exemption, before finalising the calculation; the personal income tax guide explains the wider income-tax context.
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, eligible interest and capital allowances separately identified 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.
Electronic rent payments since 1 July 2026
Article 48A, as explained by the Cyprus Tax Department, requires payment and receipt of rent for immovable property in Cyprus by bank transfer, debit or credit card, or another recognised electronic payment method from 1 July 2026. The published guidance says the obligation applies to natural and legal persons irrespective of rent amount and property use. It is a general payment rule, not merely a condition for a business tenant's deduction.
Record the payee account in the lease, reconcile each payment with the rental period and retain bank or card evidence. If someone pays on the tenant's behalf, document which obligation the payment settles. Keep the method of payment separate from the income-tax computation: electronic transfer does not make a receipt exempt, and a late or disputed payment requires its own accounting analysis.
Owning and selling: the wider picture
Rental tax is only one part of the property lifecycle. Cyprus abolished its national annual Immovable Property Tax from 2017; local charges still vary by authority and property. 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). The exit calculation may differ because individuals can have lifetime CGT exemptions and a share sale can have different consequences; model it alongside rental tax — see the Capital Gains Tax guide and property tax guide for the full disposal picture.
Getting it right
For 2026, Cyprus rental income remains taxable even after abolition of rent SDC: for individuals, the 20% deemed building-expense 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 using electronic payment for Cyprus-property rent under the rule effective since 1 July 2026.
If you let property in Cyprus, talk to us — see our dedicated accounting and tax service for landlords in Cyprus — 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.
To assemble the supporting file, follow the rental expense records checklist. Keep the income schedule, finance documents, electronic-payment evidence and expenditure records separately so each tax deduction can be checked against its own legal conditions.