Capital Gains Tax is imposed on gains from disposal of immovable property situated in Cyprus including shares of companies not listed on a recognised Stock Exchange which own immovable property situated in Cyprus, at the rate of 20%.
In computing the capital gain the value of the immovable property as at 1 January 1980 (or cost if the date of acquisition is later), the cost of any additions after 1 January 1980 or the date of acquisition if later, any expenditure incurred for the production of the gain and the indexation allowance, are deducted from the sale proceeds. Immovable Property Tax, Immovable Property Fees and Sewerage Council Fees are not considered as expenses wholly and exclusively for the production of the profit and therefore are not deductible:
Exemptions
The following disposals of immovable property are exempt from capital gains tax:
- transfer on death.
- gifts between spouses, parents and children (including foster parents and children) and relatives up to third degree.
- gift to a company whose shareholders are members of the donor’s family and continue to be members of the family for a period of five years from the date of the gift.
- gift by a family company to its shareholders, if the company had 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 organisation or the Republic or a political party.
- exchange or disposal under the Agricultural Land (Consolidation) Laws.
- exchange provided the gain is used for the acquisition of new property. The gain derived from the exchange reduces the cost of the new property and the tax is paid when the latter is disposed.
- expropriations.
- transfer of property of a missing person under administration.
- transfer of ownership between spouses that their marriage has been dissolved by a court order or in case of transfer of ownership between the same persons for the purpose of settling their property according to the Settlement of Property Relationships between Spouses Law.
- transfer of ownership or share transfers in the event of company reorganisations.
- transfer under a qualifying loan restructuring (conditions apply).
Deductions
Individuals are entitled to deduct from the gains the following:
| |
€ |
Disposal of principal private residence
(subject to conditions) |
85.430 |
| Disposal of agricultural land by a farmer |
25.629 |
| Other disposals |
17.086 |
The above are lifetime deductions.
Administrative penalties
Administrative penalties amounting to € 100 or € 200 depending on the specific case will be imposed for late submission of declarations or late submission of supporting documentation requested by the Commissioner. In the case of late payment of the tax due, an additional penalty at the rate of 5% will be imposed on the unpaid tax.
