Capital Gains Tax (CGT) is imposed (when the disposal is not subject to income tax) at the rate of 20% on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which own such immovable property, excluding shares listed on any recognised stock exchange

DISPOSALS NOT SUBJECT TO CGT

  • Transfers arising on death
  • Gifts made from parent to child or between husband and wife or between up to third degree relatives
  • 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 donation. The property must be kept by the donee 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
  • 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
 

DETERMINATION OF CAPITAL GAIN

Liability is confined to gains accruing since 1 January 1980. The costs that are deducted from gross proceeds on the disposal of immovable property are its market value at 1 January 1980, or the costs of acquisition and improvements of the property, if made after 1 January 1980, as adjusted for inflation up to the date of disposal on the basis of the consumer price index in Cyprus.

Expenses that are related to the acquisition and disposal of immovable property are also deducted, subject to certain conditions e.g. transfer fees, legal expenses etc.

EXAMPLE

 
Sale price in Oct 201350,000 
Cost of acquisition as at 1 January 1991(90,000) 
Indexation allowance January 1991 to October 2013
€90.000 @ 227,74/119,43)-€90.000
(81,620) 
Capital gain 328,380
Legal expenses (1,000)
Taxable Capital Gain 327,380
 

LIFETIME EXEMPTIONS

Individuals can deduct from the capital gain the following:

Exemptions
Disposal of private residence
(subject to certain conditions)
85,430
Disposal of agricultural land by a farmer25,629
Any other disposal17,086
 
The above exemptions are lifetime exemptions subject to an overall lifetime maximum of €85.430