On 2 June 2020, the Income Tax Law was amended so as to give a tax incentive to landlords (individuals and companies) who voluntarily reduce the rent charged to tenants.

The amendment concerns only the tax year of 2020 and voted in order to support the Cyprus economy following the COVID-19 outbreak.

According to the amendment, a tax credit equal to the 50% of the rent reduction amount will be granted to qualifying landlords provided that the following will be satisfied:


1.   Monthly rent reduction

The monthly rent reduction is not greater than 50% and not lower than 30% of the monthly rent and apply for a maximum period of 3 months during the 2020 irrespective of the agreed months.  In case where the rent reduction will be greater than 50%, for example 70%, the tax credit will be restricted to the 50% of the monthly rent reduction.

The terms of the rent reduction should be governed by a written agreement between the landlord and the tenant.


2.   Related parties

The landlord and the tenant are not related parties as per the definition of the Article 33 of the Income Tax Law as amended.


3.   Tax credit

The tax credit reduces the final tax liability of the taxpayer for income tax purposes only and is not related with any other payable amount for Special Defence Contribution and/or General Health System contribution purposes.

In case where a tax refund may arise as a result of the tax credit, cannot exceed the amount of tax already paid.

The tax credit does not refer only to rent income but to lease income and the income from the right of use a property as well.


Contact Persons:

Marios Palesis
Partner – Tax Department


Yiota Michael
Senior Associate – Tax Department