The authorities explain this by the fact that many landlords with substantial income from renting have not indicated it in their tax returns for years. The new measure is part of a strategy to combat income concealment. Clear electronic accounting, as the agency hopes, will simplify the identification of undeclared amounts and reduce the number of violations.
At the same time, the government is introducing incentives: tenants will be able to receive a tax deduction of up to 2,000 euros for rent payments and mortgage interest on their main home. Increased transparency is expected to increase tax revenues and give access to larger benefits to both parties to the agreement.
The reform is related to the updated income tax scale, which is effective from the 2026 tax year:
- Income up to 22,000 - 0% tax;
- 22 00132 000 euros 20% tax
- 32 00142 000 euros 25% tax
- 42 00172 000 euros 30% tax
- over 72 001 euros 35% tax.
Fines are provided for violations of the new payment rules. By July, the Tax Office must issue a detailed guide with the responsibilities of landlords and tenants.
In addition, starting in April 2026, VAT exemption declarations for rental properties are submitted only through the Tax for All online portal. The T.F.1220 2026 form must be submitted within 30 days after signing the lease agreement, enclosing a copy of the agreement, identification documents, and in the case of companies, a certificate of registration of directors.
Taxes in Cyprus on the purchase, sale and ownership of real estate
Source: Cyprus Property Buyers
