Capital Gains Tax

(CGT)

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.

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.

Capital Gain Exceptions

Individuals are entitled to 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

The third exception is related to agricultural land sold by Farmer and amounted to €25.629

 

Exempt Disposals
 

  • Gifts or donations among relatives. The relation must be up to 3rd degree. From parents to children ( no tax ), between spouse ( 0.1% on the FMV), between 3 degree relatives  ( 0.1% on the FMV), to trustee €50.

  • Donations to approve charitable organisations 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 by family companies to their shareholders provided the property was acquired by the company by way of gift in the first place. In addition, if the shareholder disposes of the company’s property within the next three years from the gift date, the exemption will not be valid.

  • Expropriations.

  • Transfer by reason of organisation
     

Property transfer fees​

If the property transfers have VAT paid then Property Transfer Fee is Zero.

If the property has no VAT then will be paid 50% of the Accumulated Fee.

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