CAPITAL GAINS TAX
Capital Gains tax is imposed (when the disposal is not subject to income tax ie trading activity) at the flat rate of 20% on gains from the disposal of immovable property situated in Cyprus including gains from disposal of shares in companies which own immovable property, excluding shares listed on any recognized stock exchange. From 17 December 2015 the disposal of shares of companies, which indirectly own immovable property situated in Cyprus and at least 50% of the market value of that shares derive from the immovable property, is also subject to Capital Gains Tax.
The gains from the future disposal of Land as well as land with a building / buildings acquired within the period from 16 July 2015 up to 31 December 2016 will be exempt from Capital Gains Tax subject to conditions. The basic condition is that the immovable property is acquired through purchase or purchase agreement and not through an exchange or donation, at market value, from a non-related party.
NO CHARGEABLE DISPOSALS / TRANSFERS
- Transfers arising on death.
- Gifts made 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 date of transfer.
- Gifts by a family company to its shareholders, provided such property was originally acquired by the company by the way of donation. (the property must be kept by the donee for at least three years).
- Transfers as a result of reorganizations.
- Exchange or disposal of agricultural land in accordance with the Unification and Redistribution of agricultural land laws.
- Exchange of properties, provided that the whole of the gain made from the given property has been used to acquire the other property.
- Gifts to Charities and the Government.
COMPUTATION OF CHARGEABLE GAIN
Chargeable gain is calculated as the difference between the sale proceeds and: *the value of property at 1/1/1980 if acquired prior 1/1/1980 or the cost of acquisition of the property if acquired after that date, *the cost of any improvements made after 1/1/1980, *the expenses that are related to the acquisition and disposal of the immovable property subject to certain conditions, *indexation allowance and *lifetime exemptions applicable to individuals.
LIFETIME EXEMPTIONS APPLICABLE TO INDIVIDUALS
|Life time exemptions (Note 1)||Gains up to €|
|Any disposal of immovable property||17.086|
|Disposal of agricultural land||25.629|
|Disposal of private residence||85.430|
Notes: The aggregate of all lifetime exemptions cannot exceed €85.430