Taxation in Cyprus

The rate of Capital Gains Tax (CGT) is 20% on the sale of property located in Cyprus. Profits from the sale of shares owned by a company that owns property in Cyprus are also taxed at 20%.

CGT is calculated by deducting the cost of purchasing the property (1st January 1980 is the set date) from the sale price and then adding on the effect of the retail price index to the date of sale. It is allowable to deduct genuine expenses and other costs incurred in selling the property.

There are certain CGT exemptions, including in the case of the following:

• The death of the property owner; 
• Gifts made from a parent to a child or between spouses; 
• Gifts made to charities or the Cypriot Government; 
• Where the entire capital gain was used to acquire another property, though CGT liability is merely deferred in this case until the new property has been disposed of. 

Where the gain relates to the sale of a principal residence, individuals are allowed EUR85,430 as a deduction from CGT liability calculations (with certain restrictions). Where the property is not a principal residence, the exemption is reduced to EUR17,086. This is a once only lifetime allowance.

Cyprus offers an attractive and transparent tax regime, fully compliant with EU, OECD and international laws and regulations. Its main features are:

• One of the lowest corporate income tax rates in the EU at 12.5%
• Dividend participation exemption
• Exemption on disposal of securities (e.g. shares, bonds, debentures)
• No withholding taxes on dividend, interest and royalty payments abroad
• No capital gains tax (except for disposal of real estate in Cyprus or shares of company holding real estate in Cyprus to the extent gains are attributable to the real estate holding)
• No succession taxes
• Attractive IP regime
• Tonnage tax for shipping companies
• Notional interest deduction for investments into Cyprus companies
• Personal tax exemptions for new residents and non-domiciled individuals
• More than 60 double tax treaties