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Capital gains tax (CGT) rate is set at a flat rate of 20% on the taxable gains arising.

Capital gains tax (CGT) is imposed on Cyprus companies when they have profits from the sale of:

• Shares of a company which (is not listed) and which owns immovable property in Cyprus (calculated on the value of the underlying property);

• Immovable property in Cyprus.
• Shares of companies which indirectly own immovable property situated in the Republic and derive at least 50% of their market value from such immovable property.

As an exemption to the rule, companies which have as their main activity the buying and selling of land are not subject to CGT on the sale of immovable property but to corporation tax.

The taxable gain is the difference between the selling price and the total acquisition cost, as inflated by indexation allowance plus related expenses (e.g. transfer fees, approved real estate agent commission, interest expense).

Capital losses are set off against chargeable gains and any unrelieved losses are carried forward and set off against future chargeable gains.

The following disposals of immovable property are exempt from CGT:

• Transfer on death
• Gifts between spouses, parents and children and relatives up to third degree of kindred
• Gift from a foster parent to a foster child
• 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. However if the shareholder disposes the property within 3 years then the shareholder will not be entitled to the allowances
• Gift to a charitable organisation or to the Republic or to 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 ownership or share transfers in the event of company reorganisations
• 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 under a qualifying loan restructuring (subject to conditions)
• Transfer of shares listed on a recognized stock exchange as well as disposal of units in an Alternative Investment Fund (AIF) or Open-Ended Undertaking for Collective Investment (UCITs), whose establishment and operation is governed by the respective Cypriot laws on AIFs and UCITs, which are listed on a recognized stock exchange.