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Illegal tourist rentals in Cyprus

Official figures reveal that one third of all tourists arriving in Cyprus stay in unlicensed holiday accommodation. The situation is exacerbated by developers who promote their villas and apartments as being suitable for ‘buy to let’ holiday homes.

villa-4-rent OVERSEAS tourists visiting Cyprus often choose to stay in unlicensed villas and apartments, rather than staying in hotels. As well as being illegal, this situation is of great concern to the Cypriot tourism industry and the island’s economy.

Cyprus is not alone in this respect; many tourist hot spots around the world suffer from the same problem. Money that should be ending up in local hoteliers’ and state coffers is being siphoned off by foreign companies and private individuals who avoid paying taxes.

In Cyprus, the situation is exacerbated by property developers and overseas property marketing companies who promote apartments and villas as suitable for ‘buy to let’ holiday homes, but fail to advise potential purchasers that renting to tourists is illegal unless they obtain a licence from the Cyprus Tourism Organisation (CTO).

Further problems have been reported where properties in residential areas have been rented out to tourists. Late night parties, drunken revelry, screaming children and pool parties make life intolerable for permanent residents living nearby.

A number of countries are starting to clamp down on illegal renting. In Spain for example, some British home owners have been fined as much as €30,000 for renting their properties without a licence. In Crete, the Greek Tourist Board (EOT) insists that all rental properties must be registered and inspected by them and anyone buying  a property to rent may have up to £7,000 pounds added to the property’s purchase price.

Under Cyprus Tourist Laws, property lettings of less than 30 days are not permitted unless the owner of the property has a licence from the CTO. But like many of the laws in Cyprus, the authorities appear either unwilling or unable to ensure that it’s enforced.

Tax liability

Income derived from property lettings must be declared to either the Cyprus Inland Revenue Department or to the Inland Revenue Department in the country of origin of the owner.

The UK Government’s web page ‘Tax on overseas property lettings’ explains the tax situation for British nationals. “If you live and pay tax in the UK you must declare rental income from overseas property lettings on the foreign pages of your tax return. If you pay foreign tax on the income, you can usually get credit for this against the UK tax you have to pay on it.

As the local authorities in Cyprus are also permitted to charge a small rent tax, anyone renting out their property is obliged to register details with their local council office.

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