2026 Cyprus Tax Reform: Key Changes for Property Owners & Landlords

Major relief for landlords: Rental income is NO LONGER subject to Special Defence Contribution (SDC).

New treatment: Rental income is ONLY subject to Income Tax at progressive rates (0% / 20% / 25% / 30% / 35% for individuals, 15% for companies).

Example: Individual with €24,000 annual rental income (€2,000/month)

Example:

• Gross rental income: €24,000
• Automatic 20% deduction: €4,800
• Taxable amount: €19,200

Major savings on property transactions: The Stamp Duty Law has been fully abolished from 1 January 2026.

Applies to: All contracts executed on or after 1 January 2026.

Important: If you previously used part of your old exemption, you can now claim the difference up to the new limit.

Example: If you used €17,086 of the old general exemption, you can now claim an additional €12,914 (€30,000 – €17,086) on your next qualifying disposal.

Example: Primary Residence Sale with Top-Up

• Previously used exemption (2018 sale): €50,000
• New exemption limit: €150,000
• Available top-up: €100,000 (€150,000 – €50,000)
• 2026 sale capital gain: €120,000
• CGT due: €4,000 (€20,000 × 20%)

New CGT deferral: Land exchanges with developers (antiparochi) are now explicitly exempt from CGT as “exchange of property”.

Applies to: Agreements where you exchange land for apartments or developed plots with a licensed land developer.

⚠️ What happens if development not completed in 5 years?

CGT becomes payable at the 5-year mark. However, no interest or penalties apply for the period from the agreement date to the 5-year expiry.

⚠️ Important for property investors:

The threshold for CGT on disposal of shares in property-rich companies has been reduced from 50% to 20%.

Important relief: If a Double Tax Treaty (DTA) between Cyprus and the shareholder’s country specifies a different threshold (e.g., 50%), the DTA threshold prevails over the domestic 20% rule.

Check your DTA: Foreign shareholders should review the relevant treaty to determine which threshold applies.

⚠️ Critical: If total disposals of shares listed on non-regulated markets exceed €50,000 in a calendar year, CGT applies to ALL disposals in that year – not just the excess over €50,000.

Example:

• January: Sell shares for €30,000 → No CGT (under €50k threshold)
• June: Sell shares for €25,000 → Total now €55,000
• Result: CGT applies on ALL €55,000 of disposals, not just the €5,000 excess

Good news: Shares listed on a non-regulated market that were owned as at 31 December 2025 remain exempt from CGT regardless of disposal value.

⚠️ Critical for landlords:

From 1 July 2026, rent payments must be made electronically for tenants to claim the rental expense deduction. Cash payments = tenant loses deduction.

Before 1 July 2026:

1. Provide bank details: Give tenants your bank account information for transfers
2. Update rental agreements: Specify electronic payment as the required method
3. Communicate with tenants: Inform them of the July 2026 requirement
4. Set up systems: Ensure you can receive electronic payments

A: You save 2.25% of gross rental income across both properties (the old SDC rate was 3% less a 25% reduction).

Example:

• Property 1: €1,200/month = €14,400/year
• Property 2: €900/month = €10,800/year
• Total rental income: €25,200/year
• OLD SDC cost: €567/year (2.25% × €25,200)
• NEW SDC cost: €0
• Annual savings: €567

You still pay Income Tax on the net rental income (after expenses), but the SDC is gone.

A: It depends on the capital gain and whether you’ve used any exemption before:

Scenario 1: Never used exemption, gain under €150,000

• Purchase: €150,000 | Sale: €280,000 | Gain: €130,000
• CGT: €0 (entire gain covered by €150,000 primary residence exemption)

Scenario 2: Never used exemption, gain over €150,000

• Purchase: €200,000 | Sale: €450,000 | Gain: €250,000
• Exemption: €150,000
• Taxable gain: €100,000
• CGT at 20%: €20,000

Remember: The €150,000 exemption is a LIFETIME exemption, but if you used the old exemption partially, you can top up to €150,000.

A: Yes! You can claim the “top-up” difference.

• Old exemption used: €50,000
• New exemption limit: €150,000
• Available for future sale: €100,000 (€150,000 – €50,000)

This applies to all three exemption categories (primary residence, agricultural land, general).

A: You need to transition to electronic payments before 1 July 2026.

Steps:

1. Provide your bank account details to your tenant
2. Update the rental agreement to specify electronic payment
3. Set up standing order or agree on monthly transfer arrangement

Why act now: After 1 July 2026, if your tenant pays cash, they lose their €2,000 rental deduction. Most tenants will refuse to rent from landlords who don’t accept electronic payments.

A: Calculate: (Fair Market Value of Cyprus immovable property ÷ Total FMV of company) × 100

Example:

• Company owns building worth: €500,000
• Company owns other assets worth: €1,500,000
• Total FMV of company: €2,000,000
• Property percentage: €500,000 ÷ €2,000,000 = 25%
• Result: Exceeds 20% threshold → CGT applies on share sale

Important: If a Double Tax Treaty applies and specifies a different threshold (e.g., 50%), the DTA threshold prevails.

A: No CGT at the time of exchange, provided:

• The developer is a licensed “land development entrepreneur” under Cap. 96
• The development is completed within 5 years from the agreement date

If development takes longer than 5 years:

• CGT becomes payable at the 5-year mark
• No interest or penalties for the delay period

Future sale: When you eventually sell the apartments received, CGT will apply based on the original land cost as your base cost.

A:

• Regulated market: Main markets like NYSE, LSE, CSE main market → Always CGT exempt
• Non-regulated market: Alternative/growth markets, OTC markets → €50k annual threshold applies

Critical point for non-regulated markets: If you exceed €50,000 in total disposals in a year, CGT applies to ALL disposals – not just the excess.

Grandfathering: Shares owned as at 31 December 2025 on non-regulated markets remain exempt regardless of value.