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Cyprus Tax – Cyprus Capital Gains Tax

 

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 own indirectly immovable property in Cyprus, is subject to Cyprus capital gain tax, provided that the market value of this property exceed the 50% of the shares market value.

Taxable gain

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 of 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 at 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 to amendment of the law at 17 December 2015, includes also any gain / profit does not fall under income tax law.

Exempt gains

The following life time 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 main residence (subject to certain conditions)

An individual is entitled only to the exemption whichever is the greater.

Exempt disposals

• Transfers by reason of death.

• Gifts between relatives up to the third degree of kindred (for example husband to wife, brothers, grandfather to grand son 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.

The disposal should take place within 2 years from the date that the amendment of the law is applicable (31 December 2015).

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.

• Expropriations.

• Transfer as a result of re-organisations (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 include transfer of immovable property to the lender against the loan obligation. (Subject to conditions).The disposal should take place within 2 years from the date that the amendment of the law is applicable (31 December 2015).

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: April 2017

The authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.

Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF Cyprus firms are member firms of the PKF International Limited network of legally independent firms and do not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.

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