Starting 1 July 2026, tenants and landlords across Cyprus will be required to conduct all rent payments via official electronic methods. This new regulation, set forth by the Cyprus Tax Department, aims to enhance transparency and tackle the longstanding challenge of undeclared rental income.
The updated legislation prohibits landlords from accepting rent payments in cash or by cheque. Instead, rent must be paid using bank transfers, debit or credit cards, or other certified electronic payment systems. This move creates an unambiguous financial record, enabling authorities to properly monitor rental income and diminish tax evasion risks.
The government has been prompted to adopt this measure following numerous reports of landlords not disclosing tenancy earnings. By implementing this digital-first rent payment system, Cyprus aims to foster a property market that is more tax-compliant and ultimately fairer for all participants.
Beyond curbing tax evasion, the new system offers advantages for both tenants and property owners. Eligible tenants with an annual income over €22,000 can claim up to €2,000 in income tax deductions on rent and loan interest for their primary residence. Correspondingly, landlords adhering to the system may benefit from smoother tax processing and potential allowances.
The reforms are complemented by revised tax brackets effective from the 2026 income year:
Tax returns reflecting these changes will need to be filed in 2027.
Violations of the electronic payment mandate will lead to penalties, with the Tax Department preparing detailed guidelines to clarify the responsibilities of both landlords and tenants. This clear communication is crucial as the new rules take effect.
In parallel, VAT exemption declarations on property leases must now be submitted digitally through the Tax for All portal. Lease declarations are due within 30 days of signing agreements, with provisions for extensions upon request. Required documents include copies of lease contracts and identification details for individuals or companies involved.
For those exploring different segments of the Cyprus property market or seeking opportunities aligned with these reforms, consider visiting our listings of Cheap Apartments for Sale Cyprus or browsing through Plots of Land for Sale to understand how these changes might impact various investment types.
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