Buying to let...

This was from 2021.

The Airbnb Regulations in Cyprus

11 May 2021

The Airbnb Regulations in Cyprus

Recommended contact personGeorge Tashev

George TashevSenior Associate Lawyer

Every property manager or owner who would like to offer self-catering accommodation services will have to submit an application in order to be added to the register.

The Rules | The Fines | The Grace Period | The Application | The License

The island of Cyprus being considered a hot spot for tourists, welcomed 4 million people in 2019 bringing 2.7 billion euros in revenue. Clearly, one of the island’s largest sources of income is tourism. This has created an alternative market for accommodation. The obvious choice being hotels with plenty on offer in Cyprus, there are also many people who prefer a more personal cost efficient experience when traveling.

Platforms such as Airbnb have become very popular among holidaymakers. Owners of properties have managed to exploit their properties and generate higher levels of income through operating as a self-catering accommodation. Their clients will often not only get a better priced accommodation but properties will vary in style, size and location giving them a more personalised option closer to everyone’s different needs.

The increase of self-catering accommodations through various platforms has also created the need for their regulation. Self-catering accommodation has been quite uncontrolled leading to some issues in the industry. When offering a service, especially, when it can involve dealing with families who have young children it is important to have protocols and requirements in place to ensure safety. In a bid to upgrade the quality of service offered through platforms such as Airbnb meanwhile raising the public revenue, the House of Representatives passed an amending of the governing law (the Regulation of the Establishment and Operation of Hotels and Tourist Accommodation (Amending) Law 2020 (9(I)/2020)) on the 17th of January and published it in the official Gazette on the 7th of February 2020.

How will the Amendment be implemented?

Essentially, the amendment aims to create a platform in which all self-catering service accommodations are registered and it will be held by the Deputy Ministry of Tourism. The definition of a self-catering accommodation is given as:

either a single tourist furnished mansion, or a single residence, or a single apartment, which constitutes “a unit” under the provisions of the Immovable Property Act (Tenure, Registration and Valuation), which does not constitute a “hotel” or “tourist accommodation” as defined in Part II and Part III of the same law;

which is rented as a mansion or a residence or a unit and not as a part of it, and

is registered in the Register of Self-Catering Accommodation under the provisions of Part IIIA” for the purposes of the law.

Violating the law can one be guilty of up to 1-year imprisonment and/or a fine not exceeding 5000 euros

It is prohibited to otherwise provide self-catering accommodation services unless the requirements are met. It is important to emphasize that any units being advertised on platforms such as Airbnb and Booking.com which have not been registered on the platform can be guilty of an offense carrying a sentence of up to 1 year imprisonment and/or a fine not exceeding 5000 euros.

A grace period?

Prior to the amendments being passed, any existing self-catering accommodation providers will have a grace period of 2 years to comply with the regulations.

Applying for offering self-catering accommodation services (Airbnb style) in Cyprus

Every property manager or owner who would like to offer self-catering accommodation services will have to submit an application in order to be added to the register. The application must contain characteristics and technical specifications of the unit as well as certifications that show it has been built as per the approved building plans with all necessary safety checks. Following application the Ministry of Tourism will examine each application within 2 months and if successful will grant a unique registration number.

Licenses are granted on a 3 year period basis at the end of which need to be renewed. The fee for application is based on the size and characteristics of the unit being offered. Under certain circumstances the license can be revoked under the discretion of the Ministry for various reasons. For example if the license was obtained under false pretenses, the business has ceased its operations or if the owner is convicted of a serious crime are all grounds for potential revocation of the license.

Registration with the tax department will be necessary and a tax number will have to be obtained for every unit. Income tax will be applicable on all income generated through the self-catering unit. If the service provider is a foreign tax resident, income tax will still be applied in Cyprus due to the fact that it is income generated in the country through immovable property. The only instance where this might not apply is if there are any Tax Treaties in place between the countries which can offer relief on taxation.

The Importance of Understanding the Amendments in Theory and Practice

The ongoing necessity of harmonization in regulations for a broader coverage into previously neglected aspects of business is clear. With the end of the 2 year grace period for existing self-catering accommodations from when the amendments of the regulations have been passed is fast approaching. This creates the need for owners and managers who provide self-catering accommodation to be well advised and understand how the rules apply to their dealings, in order to avoid any penalties in the future.

At A.G. Paphitis & Co. LLC one of our main objectives as an organization is to be constantly up to date with understanding in theory and in practice how new regulations come into effect. This allows us to advise our clients in the most effective way to achieve their goals without any misinformation

Source. https://www.agplaw.com/the-airbnb-regul … in-cyprus/

As I was hearing that many people were asking about buying to let, I thought it would be a good idea to get information first hand from the Ministry of Tourism .. This was their reply received today.

"As long as he/she secures registration number from the Tax Department of the Republic of Cyprus and additionally secures registration number(license) from the Deputy Ministry of Tourism, he/she will be allowed to rent out their property as a short term holiday let.

We would also like to inform you that the registration number(license) is issued per property.

Finally, please note that according to the new legislation on Self-Service Accommodation Establishments "The property shall  be leased as a villa or residence or unit(apartment) and not part thereof."  In other words, room rentals for tourist purposes are not allowed in Cyprus.  Only entire villas, residences or apartments can be rented out for tourist purposes, after securing registration in the Self-Service Accommodation Establishments Register of the Deputy Ministry of Tourism.

Long-term renting is irrelevant to the legislation on on Self-Service Accommodation Establishments and it is regulated by other laws of the Republic of Cyprus."

Kind Regards,

Quality Assurance &

Tourist Establishments Licensing Directorate

REPUBLIC OF CYPRUS

Deputy Ministry of Tourism

P.O. Box 24535

1390 Nicosia, Cyprus

Short-Term Rentals Cyprus

The deadline for the registration of properties (06 February 2023) has passed  and failure to conform with the Law after the expiry date will constitute an offence. The advertising and/or providing of services of self-catering accommodations in Cyprus without a registration license is now illegal and the license number must be displayed on all advertising for all properties. All major platforms including (but not limited to) booking.com, Airbnb, TripAdvisor, Holiday Lettings, VRBO, must remove all properties that have not provided their license by the date above.

What is ‘Self-Catering Accommodation’

This has been defined by the Law as: “either a single tourist furnished mansion, or a single residence, or a single apartment, which constitutes “a unit” under the provisions of the Immovable Property (Tenure, Registration and Valuation) Act, which does not constitute a “hotel” or “tourist accommodation” as defined in Part II and Part III of the same law, which is rented as a mansion or a residence or a unit and not as a part of it, and is registered in the Register of Self-Catering Accommodation under the provisions of Part IIIA.” 

Owners and/or rightful users of self-catering accommodation will have to complete and submit an application for the registration of their self-catering accommodation to the Deputy Ministry of Tourism.

The application carries a fee which will vary according to the type of the self-catering accommodation. Applications will be examined within 2 (two) months and upon a successful application, each self-catering accommodation will be provided with a registration number and a license.

The registration number of each unit will need to be publicized on every advert and/or any form of marketing of the self-catering accommodation (i.e. platforms such as Airbnb and/or Booking.com), as well as in all relevant transactions.

The registration license shall be valid for 3 (three) years only and upon its expiry the owner will need to apply for its renewal.

Taxation & Insurance

Applications for this license must include all the relevant details and characteristics of the unit, such as its technical specifications, and, evidence that it has been built as per the building permit and planning permission issued by the Competent Authorities.

It must be noted that the income from the rental of self-service accommodation is subject to Income Tax and possibly also on VAT based on the provisions of the relevant legislation. The applicants/licensees will also be subject to overnight stay fees to the Local Authorities (as applicable). For relevant information, interested parties should contact the relevant Services (Income Tax Department and Local Authorities, some Municipalities and Community Councils).

It is important to note that as of the 07.02.2022 the Ministry of Tourism may conduct an ex-officio inspection of any self-service accommodation, to verify the existence of a license to register in the self-service accommodation registration, as well as the observance of the terms of its registration as self-service accommodation.

If for any reason you have not yet submitted your application it is advisable to do so asap. Applications can be submitted us ing the following link https://www.tourism.gov.cy/tourism/tour … n?openform

Booking.com, Airbnb, TripAdvisor, vrbo etc have already started the process of complying with Cyprus law on vacation rentals and removing all unlicensed properties from their platforms. Short term rental property owners had until the 7th of February to provide their licence details as it will be illegal to rent, make available to rent or advertise for rent for short term all properties not licensed by the Cyprus deputy ministry of tourism from this date, fines upto €5000 can be levied against offenders. To register, visit the Deputy Ministry of Tourism’s website.

Thanks for clarifying this Toon.

For avoidance of doubt I am assuming there is no known setup where a UK resident can do short term holiday lets anymore in Cyprus? (e.g. through company?)

The agents and letting companies must be licensed to do so... And that being the case then that should be ok but then in think you may not be able to advertise the property yourself as every advert must carry licence details no matter what platform is used

@Toon Thanks. My understanding was that the obligation to comply (not to do short term lets) would be on owner regardless of method to rent either direct or via a 3rd party. My plan was to use a 3rd party (Agency).

Does anyone know for sure or can recommend someone (lawyer) who is open to a chat around this?

Happy to post back findings for the group if it helps.

Most lawyers will do a free short consultation. Worth a punt I would say

I see an extension of one year to the amnesty for licensing short let's has been announced today

You may well be right that it is the obligation of the owner to be licensed...but I still see many ads for short holiday let's and very few have license details and many are agents advertising under their name with their license. Is this a loophole.?Maybe ask a few agents

@Toon Just did - they basically went to their in-house lawyer who confirmed what I said but said no one is following rules or getting fined right now. If/When that actually starts happening then things might change fast.

I agree. The amnesty is a farce .... Three years have passed... However I think there is just as much tax evasion on long term lets as short term lets...

The whole thing is ridiculous along with swimming pool rules on complexes  requiring licencing as they are deemed public when used by more than one family ....and needing to have a full time lifeguard(s) in operational hours ..

All are literally unenforceable.

thanks.for the clarifications and update

Welcome to Cyprus

Amnesty extended to end of 2024....

TAX LIABILITIES OF RENTAL INCOME IN CYPRUS

If you are already renting out or planning to rent out your property in Cyprus, these are the tax implications you should consider beforehand:

Tax Liabilities that may arise from Rental Income:*

- Income Tax

- Special Defense Contribution

- Contributions to the General Healthcare System

- Value Added Tax

- Stamp Duty

* Please note that all the above are dependable on the type of property, lease, tax residency, legal status etc, and do not apply to everyone.