CYPRUS CAPITAL GAINS TAX
Cyprus Tax Rate
Cyprus Capital gains tax is levied on gains from the disposal of Cyprus property (immovable) at the rate of 20%, as well as gains from the disposal of shares in Cyprus companies owning immovable property and are not listed in any recognised stock exchange and rights arising from a sales agreement of immovable property situated in Cyprus. As from 17 December 2015 gain from the disposal of shares of a company which owns indirectly immovable property in Cyprus, is subject to Cyprus capital gain tax, provided that the market value of this property exceeds the 50% of the shares market value.
The taxable gain is the difference between the gross proceeds and the original cost of the Cyprus property increased with any improvements as adjusted for inflation up to the date of disposal and based on the consumer price index in Cyprus. In the case the property has been acquired before 1 January 1980, the gain is the difference between the gross proceeds and the market value of the property as was on the 1st of January 1980. The market value as was on the 14th of July 1974 can also be chosen for calculation if the owner chooses to do so. The definition of the gain, in accordance with the amendment of the law on 17 December 2015, includes also any gain/profit that does not fall under income tax law.
The following lifetime exemptions are available to individuals.
1. The first €17.086 of taxable gains from the disposal of any Cyprus property
2. The first €25.629 of taxable gains from the disposal of agricultural land by a farmer (subject to certain conditions)
3. The first €85.430 of taxable gains from the disposal of private residence used by the owner as the main residence (subject to certain conditions)
An individual is entitled only to the exemption whichever is the greater.
• Transfers by reason of death.
• Gifts between relatives up to the third degree of kindred (for example husband to wife, brothers, grandfather to grandson and uncle to nephew).
• Exchange of Cyprus properties (under certain conditions).
• Gifts to Cyprus companies where all the shareholders are and continue to be members of the donor’s family for at least five years after the transfer date.
• Gifts to the Government, district authorities and approved charitable institutions.
• Gifts from family companies to their shareholders where the property was acquired by donation and is kept by the donee for at least three years.
• Transfer as a result of re-organizations (under certain conditions)
• Gain from disposal of land and buildings acquired from 16 July 2015 until 31 December 2016.
• With the aim to give motives for loan restructuring, tax incentives have provided, in those cases that such a restructuring includes transfer of immovable property to the lender against the loan obligation. (Subject to conditions).The disposal should take place until 31 December 2022.
If a part of the sale proceeds, will return to the borrower, then this amount is subject to IT, CGT and SDC, which must be withheld and paid to the authorities by the loan provider. The cost of acquisition is the amount had been agreed for the purpose of restructuring.
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Last update: March 2022
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