Cyprus is a popular holiday destination for many countries, so the practice of renting properties on the island through Airbnb has become increasingly popular. More recently, the profit of this type of letting has come under scrutiny from the tax authorities who are looking to address the problem of tax evasion on rental income received.
Over 20,000 properties in Cyprus are rented via Airbnb and other websites and although some owners are paying tax on the rental income they receive, others manage to avoid paying tax. The House Finance Committee discussed the renting/leasing of properties via Airbnb and other on-line services yesterday with a view to plugging loopholes in the law.
The Cyprus tax commissioner, explained that the current legislation needs to be updated in order to levy tax online generated rental income – and the first step would be to permit the relevant authority to set up a register of short-term leases.
Meanwhile two draft bills were discussed by the Committee: The author of one of the bills has stated that law must require the owners of properties who rent them out via Airbnb and other online services to register those properties with the authorities; owners who failed to register would be held responsible; a fine of €5,000 was suggested. Mr Neophytou pointed out that single day leasing is illegal.
A second bill would enable properties that are not currently registered with the Cyprus Tourism Organisation (CTO) to be registered and regulated. Greece introduced legislation a few months ago to tax annual rental income:
- 15% on income up to €12,000.
- 35% for income between €12,000 and €35,000.
- 45% on income above €35,000.
Similar legislation has also been introduced in the Netherlands, the UK, Germany, Spain and other European countries.