CAPITAL GAINS TAX

Capital gains tax is imposed at the rate of 20% on:

• gains from the disposal of immovable property situated in the Republic
• gains from the disposal of shares of companies not listed on a recognised stock exchange which own immovable property situated in Republic. In this case, the gain is calculated exclusively on the basis of the gain from the immovable property. The value of the immovable property is its market value at the time the shares sold.

The taxable gain is the difference between the sale proceeds and the original cost of the property plus improvements as adjusted for inflation up to the date of disposal on the basis of the consumer price index in Cyprus. If the disposed property was acquired before 1 January 1980 its original cost is deemed to be the value of the property as at 1 January 1980. Any expenditure incurred for the production of the gain e.g. legal fees, is deducted from the sale proceeds. The following expenses however are not deductible:

• Immovable property tax
• Immovable property fees
• Sewerage fees

Lifetime Exemptions to Individuals:

Gain 

On the disposal of any property €17.086

On the disposal of agricultural land by a farmer €25.629

On the disposal of own residence (under presumptions) €85.430

The above exemptions are given only once and not for every disposal.

No individual can claim all three exemptions but can claim one of these exemptions whichever is the higher.

Exemptions

The following disposals of immovable property are not subject to Capital Gains Tax:

• Transfers arising on death.
• Land as well as land with buildings acquired during the period 16 July 2015 - 31 December 2016 provided that the immovable property was acquired through a purchase agreement and not through an exchange or donation, at market value, from a non-related party. The exemption does not apply to disposals of immovable property that have been acquired under foreclosure procedures.
• Gifts between spouses, parents, to children and between relatives up to third degree of kindred.
• 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 if the transfer.
• Gifts by a family company to its shareholders provided such property was originally acquired by the company by way of gift and given that the ownership will remain in the shareholder’s ownership for at least three years.
• Gifts to charities and the Government.
• Transfers as a result of reorganisations.
• Exchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws.
• Expropriations.
• Transfer of property as a settlement by court decision, between ex-husband and wife.
• Transfer of property of a missing person during the administration of such property.
• Exchange of properties, provided that the whole of the gain made on the exchange has been used to acquire the other property. The gain that is not taxable is deducted from the cost of the new property, i.e. the payment of tax is deferred until the disposal of the new property.