Cyprus Abolishes SDC on Rental Income: What Landlords Pay in 2026
Cyprus has abolished the Special Defence Contribution on rental income from 1 January 2026. Landlords no longer pay 3% on 75% of the rent, but income tax and the 2.65% GHS contribution still apply.
By RealDeal team · 2 min read · Published 15 Jan 2026 · Updated 8 Oct 2026
From 1 January 2026, rental income in Cyprus is no longer subject to the Special Defence Contribution (SDC), under the tax reform that took effect at the start of the year. Until the end of 2025, SDC was charged at 3% on 75% of gross rent, an effective rate of 2.25%. Rental income remains taxable: individuals pay income tax and companies pay corporation tax.
What changes for landlords
| Until 31 Dec 2025 | From 1 Jan 2026 | |
|---|---|---|
| SDC on rent | 3% on 75% of gross rent (2.25% effective) | Abolished |
| Income tax (individuals) / corporation tax (companies) | Applies | Applies |
| GHS (GESY) contribution | 2.65% | 2.65% |
For example, on annual rent of €12,000 the SDC came to €270 a year (3% of 75% of €12,000). From 2026 that cost disappears.
Withholding and payment
Under the old rules, where the tenant was a company the SDC was withheld at source; otherwise landlords paid it themselves twice a year, by 30 June and 31 December. From 2026 there is no SDC on rent to withhold or pay, but the 2.65% GHS contribution on rental income still applies.
Other changes in the same reform
The reform also abolished stamp duty from 1 January 2026, including on new leases. From 1 July 2026, rent must be paid by bank transfer, card or another traceable method.
What this means for landlords
The saving equals 2.25% of gross rent. Rental income still has to be declared for income tax, and the GHS contribution remains. Landlords whose tenants previously withheld SDC should make sure it is no longer deducted from 2026 rent. Because the overall tax position depends on personal circumstances, landlords should check the details with a tax adviser.
This article is for information only and is not tax or legal advice.