Capital Gains Tax (GCT) at the rate of 20% is imposed (when the disposal is not subject to income tax) on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies, which directly own immovable property. Further, as from 17 December 2015 shares of companies which indirectly own immovable property located in Cyprus and at least 50% of the market value of the said shares derive from such immovable property are subject to capital gains tax on the part of the gain relating to the immovable property situated in Cyprus. Disposals for Capital Gains Tax purposes specifically include sale, exchange, leasing, gifting, abandoning of use of right, granting of right to purchase, and any sums received upon cancellation of disposals of property.
Shares listed on any recognized stock exchange are excluded from the above provisions.
The following disposals of immovable property are exempt from capital gains tax:
- Land as well as Land and Buildings, acquired at market value during the period 16 July 2015 up to 31 December 2016 will be exempt from Capital Gains Tax on their future disposal
- Transfers arising on death
- Gifts between spouses, parents and children and relatives up to third degree
- Gifts to a company whose shareholders are members of the donor’s family and continue to be members of the donor’s family for a period of not less than five years from the date of the gift
- Gifts by a family company to its shareholders, if the company has also acquired the property in question via donation and provided the property remains in the possession of the shareholder for at least three years.
- Gifts to charitable organizations of the Republic and to the Government
- Exchange of properties, provided the gain is used for the acquisition of new property (roll over relief)
- Exchange or disposal of immovable property under the Agricultural Land(Consolidation) Laws
- Transfer of ownership between spouses that their marriage has been dissolved by a court order
- Transfers as a result of reorganizations
- Donations to a political party
Determination of capital gain for CGT purposes
Liability arises only on gains accruing as from 1 Jan 1980 i.e. 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. interest costs on related loans, transfer fees, legal expenses etc.
The following deductions from the capital gain exist for individuals:
|Disposal of own residence (under certain conditions)||85.430|
|Disposal of agriculture land by a farmer||25.629|
|Any other disposal||17.086|
The above exemptions are life time, granted only once for each taxpayer and not for each sale. An individual claiming a combination of the above is allowed a maximum of €85.430.