Cyprus bans cash payments for rental housing
Starting 1 July 2026, new rules will come into force in Cyprus’s rental housing market. All payments must be made exclusively through official electronic channels — including bank transfers, card payments, and other certified cashless methods, according to the Index.cy portal.
Full shift away from cash and cheques in the rental market
The reform, prepared by Cyprus tax authorities, prohibits the use of cash and cheques for rental payments. From now on, transactions between tenants and landlords must be carried out only through the banking system or digital payment services.
The main goal of the changes is to create a transparent financial trail for every transaction. This will allow tax authorities to more accurately track rental income and reduce cases of undeclared profits. The initiative responds to numerous instances where landlords generated income informally. In practice, the system moves the entire rental sector into a digital format, where every transaction is recorded and can be audited by the tax authorities.
Tax benefits and rates for rental income in Cyprus
The reform is accompanied by expanded tax incentives. Tenants with an annual income above €22,000 may qualify for tax deductions of up to €2,000, which apply to rent and mortgage interest for primary residences.
For property owners, participation in the new system also means more structured reporting and simplified payment processing, as all transactions will be automatically recorded in the banking system. As part of a broader reform, Cyprus is introducing an updated income tax scale effective from 2026. The rates vary depending on income levels:
20% — €22,001–32,000
25% — €32,001–42,000
30% — €42,001–72,000
35% — above €72,001
Tax declarations under the new rules will be submitted in 2027.
Digitalisation of rentals and transition to the Tax For All portal
Cyprus continues to shift its tax system into a digital format, with the Tax For All (TFA) government portal becoming the central tool. It is used for all key tax procedures, including notifications related to rental property and VAT regimes.
One of the changes concerns Form T.F.1220 — the declaration of non-application of VAT to rental income. The Cyprus Tax Department has confirmed that this form must be submitted exclusively via Tax For All, with no alternative channels available.
Documents must be submitted within 30 days of signing a rental agreement. Extensions or adjustments may be granted in certain cases, but only at the discretion of the tax authorities.
This effectively marks a shift from fragmented procedures to a unified digital system, where all actions are recorded through a taxpayer’s online account, gradually replacing paper-based processes.
What this means for investors and property owners
Analysts at International Investment note that for investors and property owners, the reform signals a shift towards a more predictable but less flexible market. The main change is increased transparency: rental income and transactions become easier to track, reducing room for informal arrangements and “grey” schemes.
On the one hand, this improves trust in the market and strengthens institutional stability, particularly for foreign investors who value transparent tax environments. On the other hand, administrative obligations and compliance costs increase, with greater attention required for deadlines, documentation, and payment methods.
In the short term, some owners accustomed to cash payments and flexible arrangements may react cautiously. In the long term, however, the market is expected to adapt, with greater transparency reducing capital risk and making entry easier for institutional players.
FAQ: Rental reform in Cyprus and cash payment ban
When do the new rental payment rules come into force?
From 1 July 2026, new requirements for rental payments in Cyprus will take effect.
Will cash payments for rent still be allowed?
No. Cash payments and cheques are banned. Payments must be made only through bank transfers, cards, and other official cashless channels.
Which payment methods will remain allowed?
Bank transfers, card payments, and other certified electronic payment methods will be permitted.
Why is the cash ban being introduced?
The main goal is to increase transparency in the rental market and ensure a full financial trail of transactions. This allows tax authorities to track rental income more accurately.
How will the reform affect property owners?
Owners will need to switch to more formal and transparent payment methods. This increases oversight but reduces the risk of undeclared income and simplifies reporting.
How will the changes affect tenants?
Tenants will be required to use only cashless payment methods, making the process more standardised and traceable.
Are there any tax changes linked to the reform?
Yes, tax incentives and updated income tax rates are also being discussed, which may affect rental income and housing-related expenses.
What happens with tax reporting?
Tax declarations under the new rules will be submitted in 2027 as part of an updated administrative system.
What is Tax For All and how is it related to the reform?
Tax For All is Cyprus’s official government digital portal used for submitting tax forms and declarations. It is becoming the key system for tax administration, including rental-related processes.
Which forms are now submitted through Tax For All?
In particular, Form T.F.1220, related to the VAT regime for rentals, must be submitted exclusively through the Tax For All electronic system.
What happens if the new rules are not followed?
Non-compliance may result in fines and tax penalties for both landlords and tenants.