CAPITAL GAINS TAX – CYPRUS
Realize Your Gains — Retain Your Value.
Cyprus imposes Capital Gains Tax (CGT) only on gains from the disposal of immovable property located in Cyprus or shares in companies holding such property. All other asset classes, including shares, bonds, and other securities, are fully exempt.
At a Glance
| Asset Type | CGT Applicability | Tax Rate | Key Feature |
|---|---|---|---|
| Immovable Property in Cyprus | Yes | 20% | Based on gain after deductions |
| Shares in Property-Holding Companies | Yes | 20% (indirect ownership) | Applies only if property situated in Cyprus |
| Shares, Bonds, Debentures (General) | No | — | Exempt |
| Foreign Property or Assets | No | — | Exempt from Cyprus CGT |
Cyprus maintains one of Europe’s most favorable regimes — capital gains outside Cyprus are completely tax-free.
Request a CGT Calculation
We assess your gain, compute allowable deductions, and ensure you claim all exemptions.
1. Overview
The Cyprus Capital Gains Tax (CGT) applies at a flat rate of 20% on gains arising from:
- The sale, exchange, transfer, or gifting of immovable property located in Cyprus; and
- The disposal of shares in companies (other than listed shares) that directly or indirectly own Cyprus-situated property.
No CGT applies to any foreign-sourced gains, movable assets, or listed securities.
2. Scope of Tax
| Category | CGT Applies? | Comments |
|---|---|---|
| Property located in Cyprus | ✅ | Subject to 20% CGT on gain |
| Property outside Cyprus | ❌ | Not taxable in Cyprus |
| Shares in companies owning Cyprus property | ✅ | Only if property value >50% of company’s total assets |
| Shares in listed companies | ❌ | Fully exempt |
| Government and corporate bonds | ❌ | Exempt |
| Personal movable assets (vehicles, jewellery, art, etc.) | ❌ | Exempt |
3. Computation of Taxable Gain
Formula:
Capital Gain = Disposal Proceeds – (Acquisition Cost + Improvement Expenses + Inflation Indexation)
a) Acquisition Cost
Includes purchase price, transfer fees, legal fees, stamp duty, and VAT (if non-recoverable).
b) Inflation Adjustment
Indexed using the Consumer Price Index (CPI) published by the Cyprus Statistical Service up to the month before disposal.
c) Improvement Expenditure
Enhancement or development costs supported by documentation (e.g., extensions, renovations) are deductible.
4. Exemptions
| Type of Disposal | Exemption (€) | Remarks |
|---|---|---|
| Sale of Principal Private Residence | 85,430 | Subject to residence used for ≥5 years |
| Sale of Agricultural Land by Farmer | 25,629 | Applies to bona fide farmers |
| Disposal of Other Property | 17,086 | General exemption |
| Compulsory Acquisition by the State | Full Exemption | Compensation exempt |
| Transfer by Gift (between family) | Full Exemption | Between parents, spouses, children, etc. |
| Transfer on Death | Full Exemption | Heirs exempt |
| Exchange of Property for Urban Development | Full or Deferred | Depending on scheme terms |
Only one lifetime exemption may be used per taxpayer — the maximum benefit cannot exceed €85,430.
5. Deferred and Roll-Over Reliefs
- The taxable gain may be deferred or reduced proportionally when reinvested in new Cyprus property within a specified timeframe.
- Applicable primarily for reinvestments into business property or agricultural land used for the same trade.
6. CGT on Indirect Transfers
If a person disposes of shares in a non-listed company that owns Cyprus immovable property, CGT applies proportionally to the underlying property value held in Cyprus. Foreign property or shares without Cyprus property connection remain exempt.
7. CGT Exemptions for Companies
| Company Type | CGT Liability | Comments |
|---|---|---|
| Holding Companies (non-property) | ❌ | Exempt – shares considered “securities” |
| Real Estate Companies (Cyprus property) | ✅ | CGT applies on sale of property or shares |
| Development / Construction Companies | ✅ | CGT or Income Tax depending on nature of business |
| Foreign Subsidiaries | ❌ | Exempt unless Cyprus property involved |
8. Administration and Payment
| Requirement | Details |
|---|---|
| Tax Rate | 20% |
| Filing Deadline | Within 30 days of disposal |
| Payment Method | Self-assessment via Tax Department |
| Documentation | Sale agreement, purchase contract, expense records |
| Authority | Department of Taxation – Capital Gains Section |
Late submission may attract a 5% penalty and statutory interest (2.25%) per annum.
9. Planning Considerations
- Pre-acquisition structuring can eliminate future CGT exposure via non-Cyprus property holding entities.
- Transfers between related parties can be executed under gift exemptions.
- Timing of sale and valuation can significantly affect taxable gain due to CPI indexation.
- Corporate ownership structures allow more flexibility for reinvestment and succession planning.
10. Why Clients Choose Our Firm
- Expert valuation and computation of capital gains
- Structuring advice to minimize or defer CGT exposure
- Representation in Land Registry and Tax Department submissions
- Non-resident guidance for property disposal and remittance
- Legal and tax alignment for corporate and personal asset disposals
We deliver complete control over your asset disposals — compliant, optimized, and fully documented under Cyprus law.