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What is Capital gains tax in Cyprus?

                                                                                

Responsibility of Capital gains Tax in Cyprus is limited to gains accruing on the 1st of January 1980. The costs that are subtracted from gross proceeds on the sale of immovable property are at its market value on the 1st of January 1980, or the costs of purchase and upgrading of the property, if made after the 1st of January 1980, as amended for inflation up to the date of the sale of the property on the basis of the Cyprus consumer price index.

Costs that are associated with the purchase and sale of immovable property in Cyprus are also subtracted, subject to other conditions, such as transfer fees, agency fees and legal fees etc.

Example

 

 

Euros

Euros

Sale price in April 2013

500.000

 

Cost of acquisition as of 1st of February 1991

(90.000)

 

Indexation allowance February 1991 to April 2013

€90.000 @ 227,74/119,43)-€90.000

(81.620)

 

Capital gain

 

328.380

Legal expenses

 

(1.000)

Taxable Capital Gain

 

327.380

 

Capital Gains Tax Lifetime Exemption

Individual persons can subtract the following from the capital gain:

 

 

Euros

Disposal of private residence (subject to conditions)

85.430

Disposal of agricultural land by a farmer

25.629

Any other disposal

17.086

 

The above are lifetime exemptions subject to a lifetime maximum exemption of €85.430

The following are not subject to Capital Gains Tax:

 

• Transfers due to bereavement

 

• Gifts made from parent to their child, between spouses or between up to third level relatives.  Capital Gains Tax is forced (when the disposal is not subject to income tax) at the rate of 20% on gains from the disposal of immovable property located in Cyprus including gains from the disposal of shares from companies which own the immovable property, excluding shares listed on any acknowledged stock exchange.

 

• Gifts made to a company whose shareholders are members of the benefactor’s family and the shareholders maintain to be part of the family for five years after the day of the transfer

 

• Gifts by a family company to its shareholders as long as the immovable property was originally purchased by the company by way of gift. The property must be kept by the new owner for minimum three years

 

• Gifts to the Government or to charities

 

• Transfers due to company re-organisations

 

• An exchange or a disposal of an immovable property under the Agricultural Land (Consolidation) Laws

 

• Expropriations

 

• Exchange of properties, as long as the whole of the gain made on the exchange has been used to purchase the other property. The gain that is not taxable is subtracted from the cost of the new immovable property. For example, the payment of tax is postponed until the sale of the new property.