Renting out my property for holiday lets

1. As a non EU national I believe you are not allowed to rent your property out.... Unless of course you create a legitimate company to do so which means following legitimate company legislation and tax etc

Assuming you can get past that then you need to register for tax here as all income generated here must be taxed here at a flat rate of 15% outside of any  personal tax allowances and also register with the Cyprus tourism authority and follow their requirements for licencing. All advertising of your rental needs to include the CTA licence number ..  this I believe is effective now.

Assuming you do get past the above would you not be better off being taxed here by exercising your dual taxation treaty rights ( about €80 each) and taking advantage of the extremely good tax allowances ...

Thanks Toon
My wife has an Irish passport so obviously classed as European and I have read that as her spouse once registered I am afforded the exact same rights so hopefully that might overcome the citizen issue. My wife will be working part time in Cyprus but being paid by a U.K. company and have decided to stick with being taxed in the U.K. as it has little or no financial impact on her employer (if she registered for tax in Cyprus it becomes more costly for the company that employs her with potential tax liabilities etc). We also have an investment property in the U.K. that we receive an income from so our tax affairs are not straight forward and it seems prudent to stick with HMRC for the time being as I can use a U.K. accountant to file our self assessment etc. I am aware of the double taxation treaty and this really is at the centre of my question ie if for the reasons above we are taxed under the U.K. system do we pay tax on the Villa rental income in Cyprus or the U.K. and would I end up paying it twice (as HMRC rules mean we must declare all income regardless of where it is generated). Apologies it’s a complex situation but any insight or advice would be helpful

Ok that's good...which means you as a married couple can buy and rent out as many properties as you wish.......
As. Far as I know income from physical work here whether remotely or online I believe is taxable here so tread carefully get a good tax accountant here who understands Cyprus tax laws  would be my advice..

As for your tax status I think a specialist is advisable as you are both likely to be regarded as tax resident here and as such you must register for tax and complete a tax return online here via taxisnet each year whether you pay tax or not...  i know its been slightly delayed but I suspect as things tighten  it will become mandatory
 
Your income from a rental here I think  must be taxed here and you will need to declare it when you register the property with the CTA  and with that you will be allocated a CTA licence number and to do that you must be registered for tax here if you live here as a resident.... The authorities here are getting tighter ..

BEST ADVICE speak with a specialist professional here who will now their way around the Cyprus tax systems

Great thanks Toon…agree I will get professional help in Cyprus…thanks again

You are most welcome.  glad to hear that your house purchase is in the final throws good luck both

Just for information.....

Cypriot law is clear on the subject of property letting: non-residents aren’t permitted to let property on a short-term basis to holidaymakers, although they can let long-term to Cypriot residents. Therefore, unless you’re a Cypriot or an EU citizen resident in Cyprus, you must apply to the Council of Ministers for permission to buy a property. Although this is a formality, permission is granted on the condition that the property won’t be used for commercial purposes or will be let only on a long-term basis to residents of Cyprus.

To let on a short-term basis to holidaymakers you have to apply to the Cyprus Tourism Organization (CTO) to have the property certified for holiday lettings. This is permitted only on detached properties and certification can be a long and complicated procedure. There are many estate agents and developers who can help with this, but make sure you get independent legal advice before you commit yourself financially. The CTO will then inspect your property in the same way that it inspects any tourist accommodation and will charge you 3% of the expected income from the property annually. You must pay this charge even if you don’t receive the estimated projected income (or any income at all).

Although the law is clear, illegally letting properties privately to families and friends on a short-term basis is a common practice. Many agents and developers even offer a buy-to-let service for this purpose. The Cypriot government realises that the increased investment in the island and increased tourist revenue resulting from such lettings boosts the economy. For such reasons, they don’t want to discourage property buyers or potential investors, who will be paying taxes, nor tourists who will be spending money in Cyprus.

If you’re planning to let property on a community development, you must also check whether there are any community rules that prohibit or restrict letting, aside from the legal restrictions. It may also be mandatory to notify your insurance company. You are also required by law to pay tax on your rental income in Cyprus even if the income is received in another country.

Contracts
The common practice when renting as a holiday let is to draw up a simple agreement that describes the property, the names of the clients, and the dates of arrival and departure. However, if you do regular letting, you may wish to check with a lawyer that your agreement is legal and contains all the safeguards. If you use an agent, he will usually provide a standard contract. This brings us to the next point, there is always the possibility of hiring a letting agent to ease the whole process for you.

Using a letting agent
If you have little spare time, you’re better off using an agent who will take care of everything and save you the time and expense of advertising and finding clients. They can organise a range of services to suit your needs including cleaning and maintenance, administration and advertising, periodic checks when a property is empty to ensure that it’s secure and everything is in order, advising guests on the use of equipment if necessary and providing them with information and assistance (24 hours a day in the case of emergencies).

Independent letting
It could be the case that you do have spare time to invest in this matter, or that you prefer not to spend money on an agent. Alternatively, there is always the possibility of carrying out the process yourself. In fact, the best way to get a high volume of lettings is usually to do it yourself, although many owners use a letting agency besides doing their own marketing from their home country.

Rental rates and deposits
Add a returnable deposit (e.g. €250 to €850 depending on the rent) as security against loss (e.g. of keys) and breakages. This is returnable minus any necessary deductions. A booking deposit is usually refundable up to six weeks before a booking, after which it is forfeited to the host.

Advertising
A personalised website or renting website such as Trivago or Booking, where you pay for the advertisement and handle the bookings yourself, is the best option nowadays. It also pays to work with other local people in the same business and send surplus guests to competitors as they will usually reciprocate the offer.

Letting rates
An average apartment or townhouse with two bedrooms is on average between €700 and €1000 per month depending on the area of the island. For three bedroom apartments the price goes up to €1300 on average. In the case of houses or villas the price is around €2000.

Most people who let all year round have low, mid and high season rates. The high season usually includes the months of June, July and August and possibly the first two weeks of September. Mid season usually comprises of late September and October, and Easter, Christmas and New Year holiday periods, when rentals are around 25% lower than the high season. The rest of the year is classed as the low season. During the low season which may extend from October to May, rates are usually up to 50% lower than the high season.

Note that rates usually include linen, gas and electricity, although electricity and heating are usually charged separately for long lets in winter.

Increasing Rental Income
Rental income can be increased outside high season by offering special interest or package holidays. These can be organised with local businesses or tour operators to broaden the appeal and cater for larger parties. These may include activity holidays like cycling or hiking, gastronomy and wine tasting tours as well as arts and crafts.

Thanks Toon great info

Not necessarily relevant to your situation Anthony but may be helpful for others thinking about  doing it

Tax residence isn't optional, or take your pick!

If you live in Cyprus for more than six months in a calender year you are Cyprus tax resident and liable to tax on your world wide income. If you pay tax in the UK then the DTA will allow you to offset one against the other.

Can you imagine moving to England and trying to tell HMRC that you won't pay any tax in the UK because you pay it in Cyprus? It wouldn't wash!

Thanks
I have now had the chance to check this out with HMRC who broadly confirm what has been said on this thread ie tax is based on where you reside for the majority of the year (in effect you don’t get to pick). The only exception that I am currently exploring is that as British passport holders my wife and I are allowed to keep our 12,500 income tax allowance each on unearned income generated in the U.K. ie we have rental properties in the U.K. and should hopefully be able to use this allowance to offset income received from these properties (under the double taxation treaty between the U.K. and Cyprus HMRC believe that I should not be taxed on this under the Cyprus tax system as it is accounted for under the U.K. system). I will obviously get this checked out by a Cypriot tax accountant so as not to fall foul of any tax legislation in Cyprus. As a broader point pension payments, paid work that is undertaken whilst living in Cyprus (even if paid by a U.K. company into a U.K. bank account)  is liable to be paid under the Cypriot tax system. I will update this thread when I get definitive answers

My understanding is that you can use your uk allowance to cover the UK rental income, but the process is s little different than you might have imagined. Cyprus will calculate your total income (excluding pensions but including the UK rental income), calculate your liability (€19,500 per person allowance). They then deduct any tax paid in the UK. However, if you paid no tax (because the income was less than your uk allowance) then there is nothing to be deducted....