Income Tax and Renting Property in North Cyprus

In the Cyprus Today newspaper this week there was a leading article about the requirement of homeowners in the TRNC to pay income tax on any profits that they derive from the rental of their real estate assets in North Cyprus - whether they are resident on the island or not.

This information relating to income tax and renting property in North Cyprus is not new, but the newspaper needed to publish it again because there has been a significant increase in the numbers of those coming to the island to buy investment property that they then rent out to holidaymakers for example. In this article we detail the income tax requirements and explain how you pay it and whether you can claim it back on your UK tax return.

According to Article 31(6) of The Income Tax Law No.24/1982 of the Turkish Republic of Northern Cyprus, anyone who owns property in North Cyprus and rents it out is liable to pay 10% income tax on the gross profits that they derive from the rental of their real estate. According to Articles 27, 29 and 53 of the same law, payment has to be made at the nearest Revenue and Tax office to the property by the 15th day of each and every month.

In theory this sounds fair enough…and just to clarify it further, if you own a piece of real estate in North Cyprus, whether you personally live in TRNC or not, you will be liable for this tax the minute you start making money from renting out your property on the island. However, for those who are non-resident in North Cyprus, submitting a tax return and paying the 10% is far easier said than done.

The Revenue and Tax office in Girne for example is not only hard to find, it has seemingly irregular hours, long queues (which are obviously about to get a lot longer) and if you’re non-resident, finding the time and money to fly back and forth to the TRNC every month you make any income from your property is going to be tricky and expensive!

No doubt the British Residents’ Society and others will highlight this fact to the government and hopefully annual submissions will be permissible with payments possible via bank transfer or cheque in the future – but until such time it would be wise to make very good friends with a property management company on the island who will undertake to make your payments for you and provide you with receipts as proof of payment.

In terms of the effect that this requirement to pay income tax on profits derived from the rental of property in the TRNC will have on your tax return back home in the UK – unfortunately, because North Cyprus and Great Britain do not have a double taxation agreement in place, you will not be able to claim payment against liabilities in the UK…instead you will need to document the income you derive from your North Cyprus property on your UK tax return and pay UK income tax accordingly as well. We would like to suggest that this is rather unfair – on the one hand the UK won’t recognise North Cyprus and allow it to have direct flights, but on the other hand it will recognise it if you derive an income from it!