The Abolition of SDC on Rental Income in Cyprus

Cyprus has taken an important step toward simplifying its tax system with the abolition of the Special Defence Contribution (SDC) on rental income, effective from January 1, 2026. This change removes an extra charge that applied specifically to property rents and had long been seen as unnecessary and confusing.

Under the previous rules, rental income was subject not only to normal income tax but also to SDC, calculated separately. From the implementation of the new reform, rental income is no longer subject to SDC and is taxed only through the standard income tax system.

Rental income is now treated more consistently, without special surcharges. The removal of SDC also reduces the overall tax burden associated with property ownership and investment.

This reform supports a more transparent and predictable tax environment. By eliminating SDC on rent, Cyprus improves its attractiveness to both local and international property investors while encouraging long-term investment in the housing market.

The abolition of SDC on rental income is a positive reform that simplifies taxation, reduces complexity, and reflects a more modern approach to property income in Cyprus.