Cyprus Capital Gains Tax – Complete Guide

Understanding how profit from the sale of assets is taxed is essential for anyone planning to invest, relocate, or build a business in Cyprus. Whether you’re purchasing property, selling shares in a private company, or exiting a long-term investment, the way these profits are treated by the local tax system can have a real impact on your overall financial strategy.

One of the key considerations for anyone in this situation is Cyprus capital gains tax. This specific form of taxation applies to certain types of disposals and can affect both residents and non-residents, depending on the asset and location.

For foreign nationals, entrepreneurs, and EU citizens who consider moving to Cyprus or growing their business presence here, clarity around tax responsibilities is vital. The island is well-known for offering an attractive fiscal environment, but it’s important to know where rules apply, what reliefs exist, and how to stay compliant, without paying more than necessary.

In this guide, we’ll explore how Cyprus approaches asset-related profits, who is affected, which exemptions are available, and why careful planning is key. You’ll also find practical examples, insights into selling property, and answers to common questions expats and investors often ask.

Let’s dive into what you need to know about capital gains tax in Cyprus. So you can make smart, informed decisions whether you’re investing for growth or preparing to sell.

What Is Capital Gains Tax in Cyprus?

Capital gains tax, often abbreviated as CGT, refers to a tax applied on the profit realised from the sale of certain types of assets. In Cyprus, this levy is primarily focused on immovable property located within the Republic or shares in companies that hold such assets.

Unlike some jurisdictions where this kind of taxation is more broadly applied, Cyprus maintains a narrow and targeted approach.

This tax is governed by the Capital Gains Tax Law, and it operates independently of the country’s income tax system.

It is not imposed on every disposal, only on qualifying transactions where a measurable profit arises from selling or transferring specific assets. Understanding this distinction is crucial for anyone involved in property deals, business restructuring, or asset planning.

Who is affected? Both individuals and legal entities can be liable, regardless of tax residency status. However, the tax only applies when the asset in question is situated in Cyprus, or when the ownership structure ties it back to real estate on the island.

This makes it particularly relevant for investors, property owners, and business founders with holdings linked to land or buildings.

By knowing when this rule applies, and when it doesn’t, individuals can better structure deals, plan exits, and potentially reduce their liability through available allowances. For entrepreneurs and international buyers, it’s a key part of navigating Cyprus’s broader fiscal landscape.

Understanding how this rule fits into the legal framework is the first step toward smarter financial planning on the island.

Which Assets Are Subject to Capital Gains Tax?

Not all transactions in Cyprus trigger capital-based taxation. The local tax code focuses specifically on certain asset types, primarily those tied to real estate. Understanding which disposals are considered taxable events can help investors, property owners, and business founders plan more effectively.

Under the current framework, the following assets are subject to taxation when sold or transferred:

• Immovable property located within the Republic of Cyprus
• Shares in private companies that directly or indirectly hold immovable property in Cyprus
• Rights to land or property, including leaseholds or development rights, under certain conditions
• Transfers between related parties, when property is involved (subject to conditions and exemptions)

Public company shares, cryptocurrency holdings, and movable assets (like vehicles or art) do not fall under this rule. Unless the structure of the asset is tied to real estate located in Cyprus.

The emphasis here is on property-related value. If your financial activity includes acquiring land, developing residential or commercial units, or holding equity in private firms that own such assets, then these rules apply.

Knowing which disposals count, and which are outside the scope, is key to making sound financial decisions and avoiding surprises later on.

Capital Gains Tax Exemptions & Reliefs

While Cyprus does impose taxation on certain asset disposals, there are generous reliefs in place that can significantly reduce or eliminate your liability, especially for individuals selling their primary residence or receiving assets through family arrangements.

These exemptions reflect the country’s commitment to creating a tax-friendly environment for residents, investors, and business owners alike.

Here are the most notable categories that qualify for relief:

• Sale of a primary residence: If you’ve lived in your home for at least five years and meet specific conditions, a lifetime exemption of up to €85,430 may apply to your gain.
• Transfers via inheritance: Assets passed on through succession are not subject to this type of taxation in Cyprus.
• Gifting between close relatives: No tax is imposed on gifts made between spouses, parents and children, or siblings.
• Transfers due to company restructuring: Provided that certain legal and financial conditions are met, reorganisations may be exempt from tax liability.
  Compulsory acquisitions by the state: When the government acquires land for public use, the owner may not be taxed on the resulting proceeds.
• Lifetime exemption on other disposals: Individuals also benefit from smaller exemptions on land or property sales that do not fall under the main residence rule (e.g. €17,086 for other real estate, €25,629 for agricultural land by a farmer).

Understanding how these reliefs work can help reduce your financial burden and support smarter planning, especially for families, retirees, and long-term residents considering major life decisions.

Capital Gains Tax Rate in Cyprus

In Cyprus, profits from the disposal of certain assets are subject to a single, flat tax rate. This straightforward approach makes the system easier to understand and predict, especially for individuals selling real estate or shares in local private companies.

The current Capital Gain Tax Rate in Cyprus is 20% on the net profit arising from a qualifying sale.

How Is It Calculated?

The taxable amount is not the full sale price. Instead, the figure is based on the difference between the original purchase price (plus allowable expenses) and the final sale price. The authorities allow several deductions before applying the 20% rate.

These deductions include:

• Original acquisition cost
• Costs related to improvements (e.g. renovations or extensions)
• Professional fees (such as for architects, agents, legal support)
• Inflation adjustment, based on the official consumer price index
• Any applicable personal exemptions (e.g. primary residence relief)

Example Scenario

Let’s say you purchased a property for €200,000 and sold it ten years later for €400,000. Over time, you invested €30,000 in renovations and paid €10,000 in related professional fees. Your total deductions would be €240,000 (€200k + €30k + €10k), making your taxable gain €160,000.

At 20%, your liability would be €32,000, before applying any personal exemptions that could reduce this further.

How RebaseCyprus Can Help

Navigating tax rules in a new country can be challenging, especially when property, business shares, or relocation plans are involved. That’s where RebaseCyprus steps in.

With deep local knowledge and years of experience, the team supports clients across Europe in setting up companies, managing their move, and structuring their assets efficiently. Whether you’re selling real estate, launching a venture, or seeking tax clarity, RebaseCyprus offers tailored guidance every step of the way.

From paperwork to planning, we help ensure your decisions align with local regulations while protecting your bottom line. With our insight, you avoid costly mistakes and gain peace of mind.

Book an initial consultation with us now!

FAQs – Capital Gains in Cyprus

Do I pay tax if I sell my home in Cyprus?
In many cases, no. If the property was your main residence for at least 5 consecutive years and meets certain criteria, you may be eligible for a full or partial exemption from Cyprus capital gains tax. Documentation proving ownership and residence is essential.

Are gifts to family taxed?
Gifts of real estate to close family members (such as a spouse, children, or parents) are generally exempt from CGT in Cyprus. However, the transfer must follow official legal procedures, and it’s important to document the relationship and value clearly.

How can I legally reduce CGT?
There are several ways to reduce your liability:

• Claim allowable deductions for property improvements and inflation adjustment.
• Use personal exemptions if applicable (e.g. lifetime exemption allowances).
• Plan the timing and structure of the sale strategically.
• Consult with local experts like RebaseCyprus for tax planning tailored to your situation.