Which Taxes and Fees Should Be Considered When Renting Property in Limassol

When renting out property in Limassol, it is important to consider not only the potential return but also the tax burden. In 2025, the taxation system in Cyprus remains attractive, yet it includes several mandatory contributions that affect an investor’s net profit.

1. Income Tax
Rental income in Cyprus is subject to a progressive tax scale:
• Up to €19,500 per year – 0%
• €19,501 to €28,000 – 20%
• €28,001 to €36,300 – 25%
• €36,301 to €60,000 – 30%
• Over €60,000 – 35%
The first €19,500 of annual income is tax-free. Allowable deductions such as management fees, maintenance, repairs, and utilities can be applied to reduce taxable income.

2. Contribution to the National Health System (GeSY)
Tax residents are required to pay a contribution of 2.65% of their income, which funds the national healthcare system.

3. Special Defence Contribution (SDC)
This 3% levy applies only to Cyprus tax residents without Non-Dom status. Property owners with Non-Dom status are exempt from paying this tax.

4. VAT on Short-Term Rentals
If you rent your property short-term (via Airbnb, Booking.com, etc.) and your annual rental income exceeds €15,600, you must register for VAT. In this case, a 9% VAT rate applies and should be added to the rental fee.

5. Other Expenses
Operating costs include property management services, insurance, maintenance, cleaning, and utility bills. These expenses directly affect the net return on investment (net ROI).

6. New Transparency Measures from 2026
The Cypriot government introduces new transparency rules: cash payments over €500 will be prohibited for rental transactions, promoting greater financial accountability and income reporting accuracy.

In summary, when calculating the real rental yield in Limassol, it is essential to consider all applicable taxes and contributions. Effective tax planning and the right residency status (especially Non-Dom) can significantly increase the net profitability of property investments.

If you are considering purchasing an apartment or villa for rental purposes, the experts at Cyprus Realty Center will help you calculate your individual ROI and select the most suitable property for your investment goals.