Starting July 1, new requirements for tenants and property owners will come into force in Cyprus. Under amendments to the legislation, all rental payments must be made exclusively through electronic payment systems.
The new rules are established under Article 48A of the Assessment and Collection of Taxes Law and apply to everyone without exception, including both individuals and legal entities. The amount of rent is irrelevant. In practice, this means that the traditional practice of paying rent for an apartment, house, or commercial property in cash will no longer comply with legal requirements.
Which Payment Methods Are Now Allowed
According to clarifications issued by the Cyprus Tax Department, rent payments must be made exclusively through official electronic channels. Permitted payment methods include bank transfers, debit and credit cards, as well as other recognized electronic payment services, including Revolut and similar financial platforms.
The primary objective of the new measure is to create a transparent payment tracking system that allows rent payments to be easily verified and financial transactions to be monitored. For tenants, this means it will be important to keep electronic payment confirmations and receipts, which may be required during tax audits or in the event of disputes between the parties to a rental agreement.
Penalties for Violating the New Requirements
Tax authorities will have the power to monitor compliance with the new rules. If it is determined that a tenant or landlord has failed to comply with the law, the Tax Commissioner may issue an official notice requiring the violation to be corrected. A period of at least 60 days will be granted to remedy the situation.
If the violation remains unresolved after that period, financial penalties will apply. Individuals may face a fine of €300. For companies and other legal entities, fines will range from €500 to €1,000 depending on business turnover and the characteristics of the enterprise.
One of the most significant consequences of the new regulations will be the loss of eligibility for tax deductions related to the rental of a primary residence. If a tenant cannot prove that rent payments were made through electronic payment methods, they will no longer be able to claim the corresponding tax benefit. For many families, this could result in additional expenses when filing their annual tax returns.
Experts advise tenants to review their current payment arrangements in advance and, if necessary, discuss the changes with their landlords before the new rules take effect.
Why Authorities Are Tightening Controls
Cypriot authorities explain that the new measure is intended to strengthen efforts to combat tax evasion and the shadow economy. According to government estimates, a portion of rental payments still takes place outside official reporting systems, making tax enforcement more difficult and reducing transparency in the real estate market.
Electronic payments create a complete digital record of every transaction, significantly simplifying audits and reducing the risk of rental income being concealed. Similar measures have already been widely implemented in many European Union countries, where the digitalization of financial transactions is regarded as one of the most effective tools for preventing tax violations.
For most tenants, the changes are unlikely to create major difficulties, as bank transfers and electronic payments have long been common methods of paying rent. However, those who still pay in cash will need to change their usual payment arrangements.
This is particularly important for long-term residential leases, where maintaining proof of payment becomes an essential requirement for obtaining tax benefits. For property owners, the new rules also mean the need for complete documentary evidence of rental income received.
As a result, the Cyprus rental market is expected to become more transparent, while the government gains additional tools to monitor compliance with tax legislation.
