Bought an apartment in Cyprus and planning to rent it out? Tax applies in two countries: in Cyprus, because the property is there, and in Israel, because you are an Israeli tax resident. There is no double tax treaty between the two countries.
Taxes in Cyprus
1. Income tax — 0–35%. 80% of the rent is taxable: 20% is deducted automatically, no receipts needed. Mortgage interest on the purchase and building depreciation are deductible as well.
| Taxable income per year | Rate |
|---|---|
| up to €22,000 | 0% |
| €22,001 – 32,000 | 20% |
| €32,001 – 42,000 | 25% |
| €42,001 – 72,000 | 30% |
| over €72,000 | 35% |
The scale is the same for residents and non-residents. Non-residents pay only on Cyprus-source income — rent from a Cypriot property counts.
2. GHS healthcare contribution — 2.65%. Charged on the full rent, without the 20% deduction. Capped at €180,000 of income a year.
3. Special Defence Contribution — 0%. Not charged on rental income from 01.01.2026.
4. VAT on short-term lets — 0% or 9%. Long-term residential lettings are VAT-exempt. For short-term lets to tourists with turnover above €15,600 in 12 months, VAT registration at 9% is required. The property must also be registered with the Deputy Ministry of Tourism.
Examples: an owner from Israel with no other Cypriot income
Apartment rented at €1,200 a month. €14,400 a year. After the 20% deduction the taxable base is €11,520 — below €22,000, so income tax is €0. GHS: 14,400 × 2.65% = €382. Total in Cyprus: €382 (2.7%).
Villa rented at €3,000 a month. €36,000 a year. The base after the deduction is €28,800, of which €6,800 is taxed at 20% = €1,360. GHS: €954. Total in Cyprus: €2,314 (6.4%).
Tax in Israel
Israel taxes the rent as its resident’s income. There are two options:
- 15% (section 122א) — on the rent less depreciation only. Cypriot tax is not credited. For the examples above: €2,160 on the apartment and €5,400 on the villa.
- The regular scale — on net income after all expenses, from 31% for passive income. Cypriot income tax is credited.
The better option depends on the rent, expenses and mortgage — choose it together with an Israeli tax adviser.
What this means for your yield
With modest rent, Cypriot tax is close to zero and the main burden is Israeli. That is why we always calculate a property’s yield after tax in both countries, not from the gross figure in a developer’s brochure.
Indicative calculation: the result depends on the owner’s status, expenses and other income. This is not tax or legal advice. Data as of September 2026.