The payment of rent, especially on commercial premises for businesses forced to suspend their operations, has been an issue of great discussion and controversy in Cyprus.
Due to restrictions imposed by the Constitution of the Republic of Cyprus, the Government was unable to respond to popular demand for rent payments to be suspended through some form of legislative act. Instead, the Government provided certain tax breaks to encourage negotiations between land owners and tenants.
We had previously discussed the measures in response to this issue announced by the Cyprus Government during the first lockdown here.
The Government has now issued further incentives to regulate the relationship between landlords and tenants of commercial properties, as the country is going through its second lockdown (which is expected to last until the end of January 2021).
Suspension of Rent Payments
As more businesses have been forced to suspend their operations for the month of January 2021, the Minister of Health issued the following measures relating to rent payments (published in the National Gazette on 15/01/2021):
- Businesses who have been forced to suspend their operations for January 2021 due to measures announced by the Government in response to COVID-19, will be allowed to pay to their landlords only 30% of rent payments for January and February 2021 given that the remaining balance will need to be settled in 12 equal instalments until February 2022.
- Businesses who have been forced to suspend their operations for January 2021 due to measures announced by the Government in response to COVID-19 and which are renting their business premises from the Government, will not have to pay rent for January and February.
The above also apply to catering businesses who may only operate takeaway and delivery services.
The Cyprus Government also announced that it will extend and operate a tax break scheme similar to that introduced during the first lockdown. In particular, the Government plans to provide a tax break to Landlord who voluntarily reduce their tenant’s rent between January and March 2021.
Under this incentive, if a landlord reduces rent for its tenant for six months, s/he will be entitled to a discount equal to 50 per cent of the discount in rent provided. To be eligible for the tax break, the reduction in rent must be between 30 per cent and 50 per cent.
The above tax incentives will be introduced for discussion and consideration by the House of Representatives (Parliament) in Cyprus in the upcoming days.
Should you wish to receive more information, do not hesitate to contact us.