Capital Gains Tax

Capital gains tax and exemptions

Capital Gains Tax.

Capital Gains Tax is imposed (where the disposal is not subject to income tax) on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which directly own such immovable property.

Capital Gains tax is imposed on profits from the disposal of:

  • Immovable property situated in Cyprus
  • Shares of private companies whose property consists of, inter alia, immovable property situated in Cyprus. Disposal of shares of listed companies in a recognised stock exchange are not subject to the Capital Gain Tax Law
  • Shares of companies which either directly or indirectly participate in a company or companies which own immovable property situated in Cyprus and at least 50% of the market value of such shares is derived from the relevant property
  • A sale agreement of immovable property situated in Cyprus

Tax Rate.

The tax is imposed on the net profit from disposal at the rate of 20%. The net profit is calculated as the disposal sales proceeds less the greater of the cost or market value on 1 January 1980 adjusted for inflation. The value adjusted for inflation is calculated using the official Retail Price Index. The index on 1 January 1980 was 34,96 (base year 2005).

Exemptions.

  • Gifts to relatives within the third degree of kindred
  • Transfer by reason of death
  • Gifts to a company where the company’s shareholders are members of the donor’s family and the shareholders continue to be members of the family for five years after the day of the transfer
  • Gifts by a family company to its shareholders, provided such property was originally acquired by the company by way of gift. The property must be kept by the donee for at least three years
  • Gifts to charities, government or to a local authority for educational purposes
  • Transfers as a result of reorganizations
  • Exchange or sale in accordance with the Agricultural Land (Consolidation) Laws
  • Expropriations
  • Exchange of properties where the values of the immovable properties being exchanged are equal
  • Donations to political parties

Lifetime Exemptions.

Can be deducted from the taxable capital gain.
Disposal of private principal residence
(Under conditions)
85.430
Disposal of agricultural land by a farmer
25.629
Any other disposal
17.086

*Exemptions are lifetime exemptions subject to an overall lifetime maximum of €85.430.

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