The rate of Capital Gains Tax is 20% on profits obtained from the sale of immovable property situated in Cyprus, after providing for an increase indexation payment. The capital gains that are obtained from the sale of immovable property situated in a foreign country are exempt from capital gains tax.capital-gains-Tax

The Taxable gain is the result of the difference between sale proceeds and the original cost of property plus improvements cost. The total cost of property should be adjusted to include increase from the date of acquisition that took place not earlier that 1/1/1980, to the date of disposal. Increase can be estimated through the Cyprus consumer price index.

Example

The selling price for an immovable property on 30/1/2009 was   350.000
 Less the cost of acquisition on 1/1/2000 – €200,000
Less inflation (1/1/00-30/1/2009) 200.000*206.97%           (€250.085)
Taxable profit

99.915



 

Capital Gain Exceptions

For individuals are available exemptions from the Capital Gains Tax. The exceptions are only entitled once.

  • The first exception is the amount of €17.086 if the gains are from disposal of any property. Based on our example the tax to be paid is going to be calculated as follows:

Taxable profit €99.915 – €17.086 = 82.829*20% = €16.566

If the owners of the property are a couple (two individuals that are married) then the tax exception is €17.086 * 2 = €34.172

  • The second exception is the amount of €85.430 if the gains are from disposal of primary residence. The exception applies if the residence was owned and used as his/her primary residence for a period at least 5 years. In that case the calculation of the Capital Gain tax is the following :

Taxable profit €99.915 – €85.430 = €14.485 * 20% = €2.897

Except Disposals

  • Gifts or donations among relatives. The relation must be up to 3rd degree.
  • Donations to approve charitable organizations and the Government.
  • Exchange of sale of land according with Agricultural law.
  • Exchange of properties. The gain made on this exchange is used to acquire another property. That gain is deducted from the cost of new property and its non taxable.
  • Gifts to family companies. This is exempt only if the shareholders of the company are and continue to be members of the donor’s family for at least five years.
  • Gifts from family companies to their shareholders. The company must purchase the property from the first place, by the way of gift in order for the except to be valid. In addition if the shareholder disposes the property by the company throughout the next three years from the gift date the exception will not be valid.
  • Expropriations.
  • Transfer by reason of organization.

Property transfer fees

Value of property (€)

Transfer Fee (%)

Accumulated Tax

Up to 85.430.07

3

2.562.90

85.430.08-170.860.14

5

6.834.40

Over 170.860.14

8

Family transfers

If an immovable property transferred to a family company, the transfer fees are refundable in five years if the immovable property remains to the company and if there was no change related to the company’s share capital and shareholders.

If an immovable property is transferred from a family company to a shareholder or their relatives (up to 3rd degree relation) the following fees are payable:

  • 8% on the value of the property if the transfer is made to the wife of shareholder.
  • 4% on the value of the property if the transfer is made to the child of shareholder.
  • 8% on the value of the property if the transfer is made to a relative of a shareholder.

In the case of reorganizations of companies concerning the transfer of immovable property, the transfers concerned are not subject to fees.