One of the most talked-about recent legal developments in Cyprus is the enactment of legislation to regulate the operation of self-catering accommodation and short-term holiday rentals, such as apartments listed on Airbnb.
Law N. 9(I)/2020 was enacted in January 2020, amending the current ‘Law on the Regulation of Establishment and Operation of Hotels and Tourist Accommodations of 2019 (N. 34(I)/2019)’ to regulate the operation and licensing of Self-Catering Accommodation in Cyprus.
It provides for the introduction of licensing requirements and the establishment of a ‘Register of Self-Catering Accommodations’ which will be kept by the Deputy Ministry of Tourism.
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.”
Main Changes – Registration & Licensing
The renting of self-catering accommodation is from now on prohibited, unless there is a valid and renewed license issued by the Deputy Ministry of Tourism.
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 and importantly proof of registration with the Cyprus Tax Department (something that many owners or operators of self-catering accommodation would often neglect to do).
Once registered with the Tax Department, the provisions of the Income Tax Law will apply, in that the unit owner will have to declare any income derived from the unit and pay any tax liability arising from the income.
Where, the owner of the unit is not a Cyprus tax resident, income tax will be payable in Cyprus, as it will be considered as tax arising from income from immovable property and/or business in Cyprus.
Proof must also be provided that the unit is insured against any danger including fire and public liability.
Grace Period for Compliance
On a final note, it should be noted that a grace period of two (2) years was provided to operators of self-catering accommodation to conform with these new legislative provisions.
New landowners and operators, who wish to rent out their properties will however, have to register their units immediately.
Failure to conform with the Law after the expiry of the grace-period, will constitute an offence and the advertising and/or providing of services of self-catering accommodations in Cyprus without a registration license is now illegal.
