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VALUE ADDED TAX (VAT) ON RENTAL INCOME

VALUE ADDED TAX (VAT) ON RENTAL INCOME

Value Added Tax (VAT) is a tax applied on the supply of goods and services in Cyprus.

When it comes to property rentals, VAT is charged on the rental fees for properties that are rented out for business or commercial purposes. This includes properties used for vacation rentals, as well as long-term rentals for office spaces, warehouses, and shops. The tax rate of VAT on property rentals in Cyprus is currently set at 19% for properties rented for commercial purposes and 9% for properties used as holiday accommodations.

The VAT on property rentals in Cyprus is governed by the VAT Law, which provides for various rules and regulations that must be followed. For example, landlords who are required to pay VAT on their rental income must register for VAT with the Cyprus Tax Department. An obligation for registration exist if the annual rental income exist the registration threshold of €15.600. Once registered, they must charge VAT on the rental amounts they receive and submit regular VAT returns to the tax authorities.

In addition, landlords who are required to pay VAT on their rental income may also be able to claim back some of the VAT they have paid on expenses related to the rental property. These expenses might include repairs and maintenance, utility bills, and management fees. However, landlords must be able to provide evidence of the expenses they have incurred, and the VAT they are claiming back must be properly recorded in their VAT returns.

It is worth noting that some types of property rentals in Cyprus are exempt from VAT. This includes residential rentals, as well as some other types of rental agreements, such as those related to land and buildings used for agricultural purposes. However, these exemptions are subject to certain conditions, and landlords should seek professional advice to ensure they understand their obligations and entitlements.

In conclusion, VAT on property rentals in Cyprus is an important consideration for both landlords and tenants. Landlords must ensure they comply with their VAT obligations, while tenants should be aware of the VAT rates that apply to different types of rental agreements. Professional advice should be sought in order to navigate the complexities of Cyprus tax law and ensure compliance with all relevant regulations. 

The above article is provided only for information purposes. It should not be consider as a professional advice. We recommend you to ask for a professional advice before acting on any information provided.  Should you require a professional advice please contact us at info@elaaccounting.com or call us at (+357 99 832578).

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