The House of Representatives approved on Friday 22 May 2020 a government bill in the context of the plan to support the Cyprus economy. The bill relates to a tax incentive available under certain requirements to landlords that voluntarily reduce the rental amount.
The Cyprus income tax law has been amended by the addition of article 9E that relates to tax credit available to landlords if rental income from immovable property is reduced. The new article 9E provides that regardless of all other provisions of the Cyprus income tax law a person (i.e. company or individual) that earns rental income from immovable property will be eligible for a tax credit equal to 50% of the voluntary reduction of the monthly rental amount if the said reduction is both not higher than 50% and not lower than 30% of the monthly rental amount.
The person (i.e. company or individual) will be eligible for the aforesaid tax credit provided that:
- The tax credit is for a maximum of three months within tax year 2020, irrespective of the number of months for which a rental reduction has been agreed;
- The reduction of the rental amount is granted under a written agreement between the landlord and the tenant;
- The landlord and the tenant are not related persons (as defined under article 33 of the Cyprus income tax law);
- The tax credit could be utilised against the total income tax charge of the landlord for tax year 2020;
- Any refundable tax that relates to the said tax credit does not exceed the amount of tax that has been already paid.
This tax credit is part of the measures taken by the Cyprus Government towards supporting the Cyprus economy during this COVID-19 outbreak.
Originally published 27 May 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.