Capital Gains on Shares
In Cyprus there is a full exemption from Capital Gains Tax on any profit from the disposal of securities. Securities can be shares, debentures, government bonds or other securities of companies or other legal persons which have been incorporated in Cyprus. This is a distinct advantage when incorporating a Holding Company in Cyprus.
This rule does not apply to immovable property in Cyprus.
Capital Gains On Property
Capital Gains is a tax arising when you sell real property at a profit. In Cyprus this tax rate is 20% and whilst this is not the lowest in Europe it is very competitive when compared to countries such as France and Denmark that have a high Capital Gains Tax rate. This tax does not apply to profits resulting from the sale of overseas property by residents who were not resident in Cyprus at the time of the purchase, therefore you can by a property in Cyprus and then become resident and sell this abroad without becoming liable for this tax in Cyprus, although you may be liable for capital gains tax in the country where the sale took place depending on that countries rules. This may be further enhanced by the transfer of the property into a company or trust
There are several exemptions under the law as follows;
- Transfers arising upon death
- Gifts made to relatives (this is only up to third degree relatives being great grandparents and first cousins)
- Gifts to companies where the shareholders are family members.
- Gifts to Charities or Government
- Transfers resulting from re-organisation
- Exchange of property under the agricultural land laws
- If the property is compulsory purchase
- Exchange of properties (subject to conditions, although this is very complex and it is recommended not to attempt without professional assistance)
There is a deduction of €17,086 which can rise as high as €85,430 if the property has been the main residence of the person to whom the tax is applicable for at least five years. These are personal deductions so if the property is in more than one person’s name then each person is entitled to the deduction. These allowances are granted once in the lifetime of the individual, until fully exhausted, so whilst you can claim a combination of them you can never exceed an overall deduction of €85,430. There are certain conditions regarding these deductions concerning the size of the property and again professional assistance should be sought. Further allowances can be sought in connection with expenses as long as invoices and receipts are submitted.
The amount of Capital Gains tax you have to pay in Cyprus can be reduced in a couple of ways. Any Capital losses may be used to offset the gain. If there is furniture being sold with the property this can be sold separately using a separate agreement so will not be liable for Cyprus Capital Gains tax.
For more information on Capital Gains Tax in Cyprus or any other jurisdiction please follow the link below or call us on our offices Telephone Number: 44 20 7097 1385