Regulation of short-term rentals

Their registration in the register of the Deputy Ministry of Tourism contributes to the control of their operation and collection of taxes

Short-term rentals attract visitors either for holidays or work, both from Cyprus and abroad. They are now considered a social necessity for those seeking simple, quiet, private and, certainly, cheap accommodation.

Some establishments are attractive due to location and amenities they offer and appeal to visitors who want to experience luxuries their own home does not provide. Availability of furnished villas, houses and apartments in tourist, rural or special interest areas, revitalises and enhances the tourism product of our country, provides employment and helps the local economy.

Promoting them through well-known, successful platforms allows interested parties to choose accommodation in a quick and easy way, safely. Guest comments about their experience during their stay is a kind of evaluation that helps with selection.

The demand for short-term rentals is increasing year by year and the state has deemed it necessary to regulate their establishment and operation, through the Deputy Ministry of Tourism, in order to control the industry, collect taxes and protect the public.

The government has given enough time to providers to register their properties in a register created for this purpose, rendering such registration mandatory by law. The grace period for registration ends on February 6, 2023. The registration fee for each property is €222 for three years and accommodation is divided into three categories, namely tourist furnished villas, tourist furnished houses and apartments. Upon registration, establishments are granted a special mark and assigned a registration number. These are included on every platform where the accommodation is advertised and should appear in all related transactions.

The relevant piece of legislation is the Regulation of the Establishment and Operation of Hotels and Tourist Accommodation Law, L. 9(I)/2020, and its amending law L.7(I)/2022. Part IIIA of the law prohibits an owner or provider of an online platform from posting accommodation that has not secured a registration number. Notably, revenues from these rentals are subject to income tax and VAT based on the provisions of the respective applicable laws, as well as to overnight fees payable to local authorities.

Someone seeking to rent property short term, with the authorisation of the property owner if it’s not them, is obliged to submit an application to the Deputy Ministry of Tourism along with a declaration, as well as paying the registration fee. The declaration serves the purpose of confirming registration with the tax department and the provision of the tax and/or VAT identification number, the relevant details of the accommodation and its minimum technical and operational specifications, as well as an insurance policy covering against all risks, fire and public liability.

Upon registration, the deputy ministry issues the special mark and registration number. The first registration permit is valid for three years from the date of its issuance. The permit is renewable every three years within three months prior to its expiry.

The deputy ministry is authorised to use information pertaining to the accommodation either for statistical purposes or for promoting the country’s tourism infrastructure.

It may also carry out an ex-officio inspection at any time for the purpose of verifying the permit and compliance with registration conditions.

The permit may be revoked if secured on the basis of false or misleading information, or in the event the establishment ceased to be in business, or necessary registration licence details have not been renewed.

Furthermore, the permit may be revoked if the operator is convicted of serious offences relating to safety and health at work or offences relating to drugs, domestic violence, trafficking and exploitation of persons or other serious criminal offences specified in the law, or if an injunction was issued for the cessation of the accommodation’s operation or the accommodation is found to be in continuous violation of the law.

George Coucounis is a lawyer practicing in Larnaca and founder of George Coucounis LLC, Advocates & Legal Consultants, [email protected]