Capital Gains Tax (“CGT”) is a tax imposed on capital gains made by companies and individuals in Cyprus.
Application
It is applied to any gain that is attributable to:
- the disposal of immovable property located in the Republic; and
- the sale of shares in a company that owns immovable property in the Republic provided that the relevant company is not listed on a recognized stock exchange.
Rate and Allowances
The tax is charged at a set rate of 20% on the gain attributable to the sale after the relevant allowances have been taken into account. Allowances include:
- The cost of the property as on 1 January 1980, or the later date of acquisition;
- The cost of accepted additions and improvements after 1 January 1980 or the later date of acquisition;
- Allowable expenses such as registered estate agents commission, professional fees. Immovable property tax is not an allowable expense.
- Adjustments for inflation.
Lifetime Exemptions:
Subject to conditions, individuals are permitted to deduct the following lifetime exemptions:
Deduction: Euros
Disposal of a private residence 85.430
Disposal of agricultural land by a farmer 25.629
Other disposals of immovable property 17.086
Exempt Transfers
Certain property transfers will be exempt from CGT, the most important of which are:
- Transfers on death;
- Gifts between certain members of the family;
- Gifts to family companies provided that shareholders continue to be part of the giver’s family for five years from date of transfer;
- Gifts by a family company to its shareholders provided that the property that is the subject of the gift was itself obtained by the company by way of gift. Although restrictions on use of life time exemptions exist if the receiver shareholder disposes of the gift within certain timeframes;
- Gifts to approved charities;
- Transfers of shares as a result of corporate restructure;
- Gain made on the sale of shares that are listed on a recognized stock exchange.
