Cyprus Introduces €500 Cash Limit for Rental Payments Amid Tax Reform

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The Cypriot government has proposed banning cash payments over €500 for real estate rentals. The initiative is part of a broader tax reform package reported by Politis, which also includes temporary closures of businesses found guilty of serious tax violations.

The move targets widespread under-the-table rental practices. Under the new rules, payments exceeding €500 must be made via bank transfer or recognized platforms like PayPal, Revolut, or Google Pay. Authorities hope this will curb informal transactions and increase financial transparency.

Additional measures are aimed at regulating short-term rentals. The Real Estate Agents Council has proposed banning daily rentals, citing safety concerns and negative impact on the hotel sector. Deputy Minister of Tourism Costas Koumis emphasized that only 30% of such units are officially registered, posing risks to public finances and the island’s reputation.

The proposal has stirred debate. Property owners fear revenue losses, especially in tourist zones, while tenant associations warn it may drive part of the market underground. Hotel operators, however, support the regulation as a way to level the competitive playing field.

The government is also advancing structural reforms in the housing sector. Interior Minister Constantinos Ioannou announced plans to reduce minimum apartment sizes by 15% and ease zoning requirements in tourist areas. Developers may be allowed to build rental units for employees and receive extra building rights in exchange for offering discounted housing.

Building permit approval times will be shortened: 20 working days for private homes and 40 days for major projects. Meanwhile, the government may revoke the 5% VAT privilege for foreign buyers who violate ownership terms—such as illegally renting out property. Lawmakers argue that tax benefits should prioritize local families with medium or low income, even if that reduces foreign investor interest.

Tax-related reforms also target commercial entities. Businesses that fail to issue receipts or underreport revenues may be shut down for 48+ hours. Other measures include:

Seizure of company shares if unpaid taxes exceed €3,000 for over a month

Confiscation of property for debts over €10,000, with refunds for excess value

Ban on deregistering companies under investigation or with outstanding tax obligations

Until now, tax authorities mainly issued warnings and fines. The new approach imposes direct sanctions—closures, seizures, and public accountability. These methods, already applied in other EU countries, have proven effective, according to Cypriot officials.

The government also plans to adjust the tax burden: raising corporate tax from 12.5% to 15%, while reducing the defense levy on dividends from 17% to 5%.

These changes reflect a shift toward transparency and social equity in real estate and tax policy. The reforms aim to dismantle shadow systems and reallocate benefits more equitably. However, they have sparked pushback from investors and developers concerned about the impact on the investment climate.