Cyprus will require all rent payments for properties in the Republic to be made through bank accounts or recognised electronic means from July 1, as part of a Tax Department drive to tackle tax evasion and avoidance.
The Tax Department is preparing the procedures and documents needed to implement the measure, which will make cash and cheque payments for rent illegal under the new framework.
Authorities had received a large number of complaints that property owners with significant rental income were not declaring it on their tax returns. Under the new legislation, rent must be paid only by bank transfer, debit or credit card, or another recognised electronic payment method.
Property owners will also be required not to accept rent payments through any other method.
The measure is expected to benefit the state, property owners and tenants. The state is expected to collect more taxes, while landlords and tenants will be able to claim larger deductions from income tax.
For tenants, the deduction will be €2,000 from income tax for rent and interest on a performing housing loan for a primary residence, where annual income exceeds €22,000.
Taxpayers will also benefit from adjusted income tax bands. Income from €22,001 to €32,000 will be taxed at 20%, income from €32,001 to €42,000 at 25%, income from €42,001 to €72,000 at 30%, and income above €72,001 at 35%.
The changes will apply from tax year 2026 and will be reflected in tax returns submitted the following year. Those who breach the law will face penalties.
Before the law comes into force, the Tax Department is expected to issue an information note with clarifications on the new measure and the obligations of property owners and tenants.
Separately, the Tax Department said on Friday that declarations for the non-application of VAT to property leases or rentals must now be submitted exclusively through the Tax For All online taxpayer portal.
The declaration concerns Form T.F.1220 2026 and follows a Tax Commissioner notification published in the Official Gazette of the Republic on April 3, 2026.
The declaration must be submitted within 30 days of the signing of the lease. The Tax Commissioner may approve a later date, following a relevant request.
The application must be accompanied by a copy of the lease or rental agreement, a copy of the signatory’s identity document and, in the case of legal entities, a certificate of directors.
Where the form is submitted for only part of a property, a relevant description must also be attached.