Home owners who rent out their properties through Airbnb will have to pay taxes if a new law is passed in the Republic of Cyprus, but this may not be enough for tourism stakeholders who have been calling for more restrictions on the online service.
The finance house committee is expected to weigh in on the question of over 5,500 realty properties that are available for rent online through the worldwide accommodation leader Arirbnb or similar websites, according to daily Phileleftheros.
A new legislation proposal would force property owners to register with the government and pay taxes if they wish to rent out their home or property. The draft law, as it is currently drafted by ruling party Disy, would also give power to the President’s Cabinet to issue executive orders regarding special rosters for salaried taxpayers.
Local hoteliers believe that unlicensed properties ought to be used only for domestic use, not for tourism purposes
But the issue goes beyond taxation as it is part of a broader set of issues in the tourism industry.
The Cyprus Tourism Organisation (CTO) was calling earlier this year on traditional stakeholders to come up with ways to curb the high number of Airbnb rentals, citing unfair competition due to tax evasion, unregulated practices, as well as safety and health risks.
Based on previous statements by the Cyprus Hotel Association (CHA), the position of local hoteliers is that unlicensed properties ought to be used only for domestic use, not for tourism purposes.
But the legislation, which is expected to be debated in the House committee, does not address those concerns as expressed by CTO and CHA.
The law would basically require owners not only to pay taxes on their rented properties but also inform the government on the number of reservations made online. Taxes will be calculated based on their income while any owner regardless of income will have to pay a €5000 fine if they fail to register.