Capital Gain Tax applies only to gains relating to Cyprus-situated immovable property when the disposal is not subject to income tax.

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Disposal for the purposes of CGT specifically includes sale, exchange, lease, gifting, abandoning use of right, granting of right to purchase, and any sums received upon cancellation of disposals.

CGT at the rate of 20% is imposed on gains arising from the disposal of immovable property situated in Cyprus or the disposal of shares in companies that directly own Cyprus-situated immovable property. CGT is also imposed on disposals of shares in companies that indirectly own immovable property situated in Cyprus where at least 50% of the market value of the said shares derives from Cyprus-situated immovable property. Shares listed on any recognized stock exchange are excluded from CGT.

In the case of disposal of company shares, the gain is calculated exclusively on the basis of the gain relating to Cyprus-situated immovable property. The value of the immovable property will be its market value at the time the shares were disposed of.

The taxable gain is generally calculated as the difference between the disposal proceeds and the original cost of the property plus any improvements as adjusted for inflation up to the date of disposal on the basis of the consumer price index in Cyprus. In the case of property acquired before 1 January 1980, the original cost is deemed to be the value of the property as of 1 January 1980 on the basis of the general valuation conducted by the Land Registry Office under the Immovable Property Law.

Other expenses that relate to the acquisition and disposal of immovable property are also deducted from the gain, subject to certain conditions (e.g. interest costs on related loans, transfer fees, legal expenses, agent fees, renovation costs).

It is important to note that, subject to conditions, land, as well as land with buildings, acquired at market value (excluding exchanges, donations, and foreclosures) from unrelated parties in the period 16 July 2015 to 31 December 2016 will be exempt from CGT upon their future disposal.

Lifetime exemptions

Individuals can deduct the following from the amount of the taxable capital gain:
Capital gain arising from:    Deduction (EUR)
Disposal of private principal residence (subject to certain conditions)    85,430
Disposal of agricultural land by a farmer    25,629
Any other disposal    17,086

The above exemptions are lifetime exemptions subject to an overall lifetime maximum of EUR 85,430.

Other exemptions are also available, under relevant conditions, including gifts between spouses, children (including foster children), and third-degree relatives, gifts to family companies, gifts to charities, exchange of properties, donations to a political party, etc.