Capital gains is taxed at 20% on gains but gain on the disposal of immovable property, on disposal of securities is completely exempt. Gains on disposal of property situated outside Cyprus are also exempt from any taxation.
The gains that are subject to capital gains tax are gains of any person (individual or company) accruing on a disposal of chargeable property.
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.
Exempt 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 Land 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 had also acquired the property via a donation. In addition, if the shareholder disposes the property in question throughout the next three years from the gift date the exception will not be valid.
- Expropriations.
- Transfer by reason of re-organization.
- Transfer on death
- Transfer of ownership between spouses that their marriage has been dissolved by a court order.
Deductions
Individuals are entitled to deduct from the gains the following lifetime deductions:
- Disposal of principal private resident €85.430 (subject to conditions)
- Disposal of agriculture land by a farmer €25.629
- Other disposals €17.086
