Cyprus companies are reminded to withhold Special Contribution for Defence (SDC) from Rent payments and their obligation to submit Form IR 614 Declaration. Form IR614 is submitted electronically through the Cyprus Tax Department’s online service, TaxisNet.
SDC on Rental Income – Withholding procedure
As from 1 July 2011, companies, partnerships, the Government or any local authorities that pay rents are required to withhold SDC at source at the rate of 3% on 75% of the amount of the rent. That is 2,25% on the gross rent.
Tenant obligations
SDC is withheld by the tenant on the date of the payment of the rent to the landlord. The SDC withheld should be paid by the tenant to the Cyprus Tax Authorities by the end of the following month, from the date of the withholding.
For late payments, a penalty of €100 for every declaration is imposed, together with a penalty of 5% on the amount of the SDC.
At the end of the six months period (on 30 June and 31 December) the tenant should provide the landlord with Form IR614A rec “Confirmation of withholding of special contribution for defence from rents”.
Form IR614 is submitted electronically through the Cyprus Tax Department’s online service, TaxisNet together with the Tenant’s Annual Tax Declaration.
In case the Commissioner of Taxation requests the submission of Form IR614 and the taxpayer fails to submit such return, the fixed monetary penalty is increased to €200.
Landlord obligations
On receipt of the Form IR614A rec, the landlord must ensure that the SDC withheld was correct.
Any additional SDC due must be paid by the landlord by self-assessment on 30 June and 31 December of the respective tax year through the relevant self-assessment form.
Landlords should keep Form IR614A as proof of the SDC withheld by the tenants and for use/filing at the time of preparation and submission of their annual tax return.