Cyprus rent special defence contribution: abolished from 2026

Cyprus rent special defence contribution: what rent carries now

Income tax applies on the ordinary bands, which start at nil up to EUR 22,000 and reach 35% above EUR 72,000. The health contribution is 2.65%, capped once annual income reaches EUR 180,000.

Who this actually helps

Domiciled Cyprus residents with rental property. A non-domiciled resident already paid no defence contribution on rent, because that charge falls only on residents who are also domiciled here, so for a non-dom nothing changed.

Which is worth saying plainly, because the abolition gets listed among the benefits of moving to Cyprus and it is not one. If you are arriving as a non-dom, your rental position is the same as it would have been in 2025.

Where it changes a decision

For someone weighing Cyprus property as an investment rather than a home. The yield now meets two charges instead of three, which makes the arithmetic on a buy-to-let marginally better than it was.

Against that, the exit still meets 20% capital gains tax on Cyprus immovable property, and from 2026 the look-through to shares in property-rich companies starts at a 20% holding rather than 50%. The holding period got cheaper; the disposal did not.

The other half of the reform

Rent was not the only thing that moved in the December 2025 package. The defence contribution on dividends fell from 17% to 5% for domiciled residents, deemed dividend distribution was abolished for 2026 profits onwards, and a new constructive dividend rule charges 10% on company assets used privately by a resident shareholder.

Read together, the reform narrowed the gap between a domiciled resident and a non-dom one across the board. The non-dom regime is still worth claiming and is worth less than it was.

The Tax Department states the rent position on its residency and domicility page.