In an attempt to accommodate both tenants and landlords, the government of the Republic of Cyprus opted for several measures amending the current legislation on Rental Law. Specifically, the Rental (Temporary Provisions) Law grants to landlords the possibility to receive an income tax credit of up to a 50% for 2020, under the condition that they reduce the rent to their tenants.
Under the provisions of the newly voted bill, the landlord who proceeds to a voluntary reduction of the rent for a timeframe not exceeding a 3-month period, during the 2020 tax year, shall receive a tax credit reduction of 50% of the rent reduction in the following cases:
i) The reduction of the monthly rent must correspond to anywhere between 30% and 50% of the rent, covering a time period that must not exceed the 3 months, independently of any supplementary reduction period that the parties may have agreed upon. The rental credit that the landlord is entitled to receive cannot exceed the 50% rate, even if the reduction is higher.
ii) The rent reduction must be agreed upon in a written contract between the parties, which shall serve as evidential support. The 3-month reduction must be specified in the written document, concretizing the months concerned by the exceptional measure.
For the application of the aforementioned reduction in rent, the exceptional provisions of the Law as defined in Article 33 of the Income Tax Act, specify that the parties cannot be related to each other. Furthermore, the Temporary Provisions of the Rental Law of 2020, dating from March 24th of 2020, secure a supplementary protection for the tenants by prohibiting evictions until September of 2020. However, the aforementioned security measures are inapplicable in cases of regally due rents which have not been dully paid until February 29th of 2020.
The Temporary Provisions adopted in the Rental Law of 2020 do not apply to rental properties erected after the year 2000, as those fall under the scope of the Contracts Act, Cap. 149, which has not been amended so far in the same sense as the Rental Law.
The present article is for informational purposes only and does not, under any circumstances, constitute legal advice. For further information on the subject, please contact Arsen Theofanidis LLC and one of our legal advisors shall be glad to assist you.
Advocate – Legal Consultant
Arsen Theofanidis LLC