Cyprus: Capital Gains and Immovable Property Taxation

Low taxation and uncomplicated bureaucratic procedures entice business human beings and investors worldwide to make investments in the Republic of Cyprus. Cyprus’ low taxation regime enables the enlargement of commercial enterprise activities on the island. In the current article, I will present some beneficial information approximately capital profits and immovable assets taxation schemes in Cyprus.

The recent amendments of Law 119(I)/2013 and Law 120(I)/2013 goal at encouraging financial hobby, attract more buyers, and simplify even more the Cyprus tax regime. According to the amendments of the legislation stated above, extra capital profits are not taxed in Cyprus. The most effective capital gains taxed are the ones related to the disposal of real estate positioned in Cyprus. Following the amendments of Law 119 (I)/2013 and Law 120(I)/2013, actual estate proprietors will be taxed based on the fee in their belongings.

Capital Gains Taxation:

Subject to certain exceptions (see the list under), the capital advantage tax is charged on profits arising after the 1st January 1980, from the sale or switch of immovable property within the Republic of Cyprus or corporation’s stocks, placed in Cyprus, that owns immovable belongings (Reference 1). Briefly, the net earnings derived from the sale or transfer of real property are taxed on the fee of 20%. The calculation of the internet earnings derived from the disposal embeds the inflation fee. Inflation is calculated primarily based on the legitimate Retail Price Index. Moreover, in keeping with the amendments of Law 119 (I)/2013 and Law 120I)/2013, the real property’s cost is calculated following the Immovable Property Law’s associated provisions.

List of Exemptions:


Transfer of assets due to demise.
Gifts to kids, spouses, and another relative up to the 1/3 diploma.
A gift to an enterprise. The shareholders of the precise corporation are and remain participants of the donor’s own family for 5 years after the gift offer.
Gift presented by using a firm to its shareholders because the specific assets became at the beginning donated to the agency. Moreover, the recipient is obliged to preserve the immovable assets for at least 3 years.
It is a gift to the government of the Republic of Cyprus’s neighborhood authorities for academic or different charitable purposes.
Exchange or sell primarily based on the Agricultural Land (Consolidation) Laws.
Exchange of homes. In this situation, the values of the real property properties which have been exchanged have to be equal.
The gain is derived from the disposal of shares indexed on any Stock Exchange.
Transfers resulted from reorganization.
Lifetime exemptions for people:

Disposal of own house: Gain (85 .430 euro)
Disposal of agricultural land through a farmer: Gain (25.629 euro)
Any different disposal of real estate: Gain (17.086 euro)

Immovable Property Taxation:

In Cyprus, the annual immovable belongings tax is imposed on every individual or a legal character who owns immovable assets within the island no matter whether they’re or now not residents of the Republic of Cyprus. The tax they may be obliged to pay is based on the full price of the complete immovable belongings registered in their name (Reference 2).

The immovable belongings tax is predicted in step with the immovable property market cost as of 1st January 1980. It is payable on the 30th September of each 12 months on the Inland Revenue Department. At this point, it needs to be clarified that character owners are exempt from this tax in case the 1980 fee in their belongings is much less than €12.500.

The applicable tax bands as revised in 2013:

If the assessed 1980 belongings value is much less than 12.500 euro, the annual tax rate is 0 (%), and the collected tax is 0.
If the assessed 1980 property price is between 12.500-40.000 euro, the yearly tax rate is 0.60 (%), and the collected tax is 240 euro.
If the assessed 1980 belongings fee is between 40.001-120.000 euro, the annual tax rate is 0.80 (%), and the accrued tax is 880 euro.
If the assessed 1980 property cost is between 120.001-170.000 euro, the annual tax rate is 0.90 (%), and the accumulated tax is 1.330 euro.
If the assessed 1980 assets cost is between 170.001-300.000 euro, the annual tax rate is 1.10 (%), and the amassed tax is 2.760 euro.
If the assessed 1980 property price is 300.001-500.000 euro, the once a year tax-free is 1.30 (%), and the collected tax is 5.360 euro.
If the assessed 1980 belongings value is between 500.001-800.000 euro, the annual tax rate is 1.50 (%), and the amassed tax is 9.860 euro.
If the assessed 1980 belongings cost is between 800.001-3.000.000 euro, the yearly tax fee is 1.70 (%), and the collected tax is 47.260 euro.

If the assessed 1980 assets cost is greater than 3.000.000 euro, the yearly tax price is 1.90 (%).

Note: Every registered proprietor whose immovable assets are more than €120.000 is obliged to put up a Declaration of Immovable Property (IR 301 and IR302) and pay the equal annual tax earlier than the 13 of September.


Important Warnings:

Because of the delays in issuing Title Deeds, some developers are the registered proprietors of real property. By the law, the “registered owners” (in our case, the developers) are obliged to pay annual declarations in their immovable property to the relevant authorities and pay the Immovable Property Tax, plus any past due fee penalties.

Until Title Deeds are issued, the customer is obliged to pay the handiest Property Transfer Fees to ease ownership of the property he or she has bought, which allows you to be then registered in his or her call. Nevertheless, in some Contracts of Sales, developers request the customers to pay the immovable belongings tax when they take the shipping of assets. A few builders fee clients outrageous sums of money based totally on the rate the belongings become sold in many instances. Moreover, in a few cases, the developers upload the complete amount past due to payment consequences.

I could advocate shoppers to invite the developers to offer them adequate proofs that reveal that the immovable assets tax that has been paid to the Inland Revenue corresponds to the land in which the improvement has been constructed.

As a result, I am advising consumers NOT to pay a developer any Immovable Property Tax unless the developer:

Provides written evidence of the amount of Immovable Property Tax that the developer has paid to the Inland Revenue for the land in which the improvement has been constructed.
Provides buyer a written assertion clarifying consumer’s shares of the aforementioned land.
Issue a written invoice on the agency’s letterhead that states the agreed amount to be paid.
Issue a written employer receipt for the amount that has been paid.
Invest in Cyprus: Have a right prison aid.


As explained above, the amendments of Law 119 (I)/2013 and Law 120(I)/2013 collectively with the tax pleasant regimes to global investors and commercial enterprise human being more incentives gs to enlarge their enterprise sports in Cyprus. However, buyers and commercial enterprise human beings must keep in mind that investing in actual estate calls for proper legal guidance.

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