The Law refers to online platforms such as Airbnb and Booking.com. The owners of self-catering accommodations will now have to follow a set of regulations and formalities in order to legally provide their services.
The new law will give an end to the uncontrolled area of business and will also bring an impact to the tax revenue funds in Cyprus.
This platform will come in the form of a ‘Register of Self-Catering Accommodations’ which will be kept by the Deputy Ministry of Tourism.
The current Law 2019 (N. 34 (I) / 2019) ' Regulation of Establishment and Operation of Hotels and Tourist Accommodations' has been amended by the new Law N.9 (I) / 2020 and from now on, will be read and referred to concurrently as 'Laws on the Establishment and Operation of Hotels and Tourist Accommodations of 2019 and 2020'.
The Law defines the term ‘self-catering accommodation’ as: “either a single tourist furnished mansion, or a single residence, or a single apartment, which constitutes “a unit” under the provisions of the Immovable Property (Tenure, Registration and Valuation) Act, which does not constitute a “hotel” or “tourist accommodation” as defined in Part II and Part III of the same law, which is rented as a mansion or a residence or a unit and not as a part of it, and is registered in the Register of Self-Catering Accommodation under the provisions of Part IIIA.”
The owners or administrators of self-catering accommodation need to follow a number of changes in order to ensure their services are provided legally.
The Law specifies in Part IIIA the conditions under which the renting of self-catering accommodation will be allowed:
The self-catering accommodation bears the features and specifications of a single residence and/or a single tourist furnished mansion and/or single apartment, as these are defined by the Law.
The self-catering accommodation is registered in the Register of Self-Catering Accommodations owening a valid and renewed registration license.
Additionally, the Law requires that the owners and/or rightful users of self-catering accommodation will have to complete and submit an application for the registration of their self-catering accommodation to the Deputy Ministry of Tourism.
The owner, in order to submit the application, should pay a fee which will vary according to the type of the self-catering accommodation. The Law has not disclosed the differing fee levels that will be applied.
The application that will be submitted must contain all the relevant details and characteristics of the unit issued by the appropriate authorities and be accompanied by documentation proving that the self-catering unit has been registered with the Tax Department and has received either a Tax ID or a VAT no., depending on which is applicable.
Once registered with the Tax Department, the provisions of the Income Tax Law should apply, in that the unit owner will have to declare any income derived from the unit and pay any tax liability arising from the income.
For those units that the owner is not a Cyprus tax resident, income tax will be payable in Cyprus, as it will be considered as tax arising from income from immovable property and/or business. The unit should also be insured against any danger including fire and public liability accompanied with the related proof.
Each application should be examined by the Deputy Ministry of Tourism within 2 (two) months from the date of submission of the application and upon a successful application, each self-catering accommodation will be provided with a registration number and a license.
The registration number of each unit will need to be published on every advert and/or any form of marketing of the self-catering accommodation (i.e. platforms such as Airbnb and/or Booking.com), as well as in all relevant transactions. As per the amended article 22 of the Law, whoever advertises or operates a self-catering accommodation without the appropriate number and licence registration in place, may be guilty of an offence which could carry a prison sentence of up to one (1) year and/or a fine not exceeding five thousand euros (€5,000).
The registration licence will be valid for 3 (three) years only and upon its expiry the owner will need to apply for its renewal. Additionally, in some cases, amongst others, where the licence has been approved based on false or misleading facts, there has been a cessation of operation of the business operating the self-catering accommodation, or where the owner/operator has been convicted of a serious offence (such as: murder, burglary, theft, fraud, forgery etc. thus creating a significant infraction of the owner/operators’ clean criminal record), it may be revoked subject to the Deputy Ministry of Tourism’s discretion.
The authority of the Deputy Ministry of Tourism, under the Law, will now be entitled, of its own volition, to carry out inspections of self-catering accommodations. It will be entitled to check whether a self-catering accommodation has a valid registration licence and, where it does, to also check whether the licence terms are being honoured by the owner/operator of the accommodation.
It is worth noting that, any persons operating self-catering accommodations prior to the enactment of the Law, will have a grace-period of 2 (two) years to conform to the new Law and regulations. New owners, however, who wish to rent out their properties, will have to register their units immediately. Failure to conform to the Law after the expiry of the grace-period will constitute an offence and the advertising and/or providing of services of self-catering accommodations in Cyprus without a registration license is now illegal.