Short-term property rentals (via Airbnb, Booking.com, and similar platforms) remain one of the most profitable asset management methods in Cyprus. This market has completely emerged from the gray area: the government has implemented a clear licensing and taxation system that protects tourists’ rights and ensures a stable income for the budget. For property owners, short-term rentals can yield between 6% and 10% per annum, significantly higher than the yield from long-term contracts, but this business requires strict adherence to administrative procedures.
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Mandatory registration in the Register of Self-Employed Entities
Since 2026, it has been impossible to legally advertise a property on international platforms in Cyprus without a unique registration number issued by the Ministry of Tourism. The registration process has become entirely digital and involves several stages:
- Application: The owner fills out an application on the government portal, indicating the characteristics of the property.
- Safety Certification: The facility must comply with fire safety regulations and have valid third-party liability insurance.
- Registration fee: A state fee is paid, which gives the right to conduct business for a period of three years.
The license number must be included in every listing. Booking platforms will automatically block accounts that fail to provide this number in 2026, and illegal listings will be subject to hefty fines.
Taxation of rental income for individuals
Income from short-term rentals is subject to taxation regardless of whether the owner is a Cyprus tax resident. The tax burden is distributed across several areas:
- Income tax: Added to all other income. A progressive tax rate will be introduced in 2026, with a tax-free threshold of €22,000.
- GESY Contribution: 65 % of income. This tax is mandatory for everyone, including non-residents, and is calculated based on gross revenue.
- VAT: If the annual rental turnover (or total business income in Cyprus) exceeds €15,600, the owner is required to register for VAT and charge VAT at a rate of 9% (reduced rate for the tourism sector).
For foreign investors with Non-Domicile status, the advantage is an exemption from the Special Contribution for Defence (SDC), which for ordinary residents amounts to 17% of rental income.
Municipal fees and the “Overnight Stay Tax”
In 2026, Cypriot municipalities introduced a flat-rate accommodation tax, similar to the European “City Tax.” This tax typically ranges from €0.50 to €2.50 per person per night and is borne by tourists. The property owner acts as a tax agent, collecting these funds and transferring them to the local budget quarterly. Short-term rental properties also incur higher rates for waste disposal and utility services, due to the increased use of infrastructure.
Professional management and operating expenses
Success in short-term rentals directly depends on the quality of management. In 2026, a market of professional management companies emerged in Cyprus, taking on the entire management cycle:
- Marketing and dynamic pricing.
- Communication with guests and check-in 24/7.
- Professional cleaning and linen change.
- Minor technical repairs.
The commission for such companies ranges from 15% to 25% of turnover. Independent management is cheaper, but requires a constant presence on the island and prompt resolution of guests’ everyday needs. It’s worth keeping in mind that electricity costs for short-term rentals are typically 30–40% higher due to uncontrolled use of air conditioners by tourists.
Limits and rules in residential complexes
An important development since 2026 is the right of apartment building management committees to introduce internal rules regarding short-term rentals. In some luxury complexes in Limassol, residents can vote to limit or completely prohibit rentals to tourists to maintain privacy. Before purchasing a property for Airbnb rentals, it’s crucial to review the complex’s General Agreement to avoid legal conflicts with neighbors.
A legal short-term rental business in 2026 is a transparent and predictable asset. Despite the need for registration and taxes, the high demand for vacations in Cyprus and the extended tourist season (now nearly 10 months long) provide investors with a stable stream of foreign exchange earnings and a rapid return on investment.
