Capital Gains Tax
Capital gains tax is paid on gains arising from the sale of the property at a rate of 20%, with the first CYP 10,000 being exempt for each person, as investment allowance. Proceeds from the sale, less the cost of the property, professional and legal fees, commission, interest paid, inflation allowance and investment allowance. The investment allowance is granted only once, unless it has not been exhausted at the first sale, in which case any balance would be carried forward.
Gains from the sale of a dwelling house are exempt up to CYP 50,000 in total if the owner resides in it continuously for at least five years prior to disposal.
The following categories are exempted from Capital Gains Tax:
- Transfers by reason of death.
- Donation between relatives up to the third degree of kindred.
- Donation to Limited Companies, all shareholders of which are members, and continue for 5 years after the donation to be members, of the family donor.
- Donations from family Companies to their shareholders, but only in cases where the property gifted was originally acquired by the Company also by way of gift.
- Donations to Charitable Institutions or to the Republic of Cyprus.
- Exchanges of permanent residence.
- Compulsory acquisitions.
Example of Capital Gains tax calculation:
Proceeds on sale of property | CYP 200,000 |
Cost of acquisition | CYP (100,000) |
Inflation allowance CYP 100,000 x 52.67% | CYP (52,570) |
| ----------------- |
Gain on the sale of property = | CYP 47,300 |
Less Investment allowance | CYP (10,000) |
| ----------------- |
Taxable Gain on sale of property = | CYP 37,300 |
| ----------------- |
Capital gains tax due = CYP 37,300 x 20% = | 7,460 |
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Goods Eligible to Import Free of Duty
Intending residents are persons who are residents abroad and satisfy the director of Customs that they intend to live in Cyprus permanently. These individuals are allowed to import free of duty the following goods:
- Clothing
- Other personal effects
- Household goods and furniture
- Professional tools and appliances, plus any other goods which are intending resident and his dependents may, in the opinion of the Director of Customs & Excise, reasonably require.
- One shotgun and one air-rifle
- Personal Computers
- Image and sound recording appliances
- Pleasure and sport boats (irrespective of the above relief, yachts and other boats for pleasure and sports are charged with 10% excise duty).
- Pony horses
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Prerequisites for the Granting of Relief are that the Goods:
- Are intended solely for the personal use of the intending resident or his dependants and quantities imported are, in the opinion of the Director, reasonable.
- Are imported within a period of twelve months prior to, or two years after the arrival of the resident