Capital Gains Tax ("CGT") is levied at a rate of 20% only with respect to capital nature profits realized upon the disposal of:
- immovable property situated in Cyprus;
- shares in companies the property whereof includes immovable property situated in Cyprus;
- shares in companies which either directly or indirectly participate in a company or companies which own immovable property situated in Cyprus and at least 50% of the market value of such shares is derived from the relevant property;
- a sale agreement of immovable property situated in Cyprus.
It is noted that the law provides that no CGT is due on any gain accruing from the disposal of shares listed in a recognised Stock Exchange.
As per Section 10 of the Capital Gains Tax Law, disposal of property includes a sale, sale by the Director of the Department of Land and Surveys or by the District Land Officer by public auction, sales agreement, assignment of rights deriving from a property sales contract, an exchange, a lease registered in accordance with the provisions of the Immovable Property (Tenure, Registration and Valuation) Law in force at the time being and a gift of property, as well as an abandonment of the use or enjoyment of any relevant right.
As per paragraph (b), Section 10 of the same law, disposal of property does not include a gift made from parent to child whether married or unmarried, between husband and wife or between relatives within the third degree of kindred, whether these persons are married or unmarried.
On 23 December 2020, an amendment in Section 10 of the CGT Law was published in the Official Gazette of the Republic, which provides that after the second reservation of paragraph (b), a new paragraph (b1) is added which in specifies that, a gift made from a foster parent to a foster child is also exempted from CGT.
It is noted that foster parent and foster child have the same meaning as defined in the Children Law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.