The recent growth in applications by foreign investors for Cyprus citizenship, offers a good opportunity to refer to the important amendments to the Capital Gains Tax Law of late last year. Capital gains in Cyprus relate to the profit upon sale of real estate situated on the island, which are taxed at the rate of 20%. This rate is charged on gains from disposal of real estate in Cyprus, including gains from the disposal of shares in unlisted companies owning real estate in Cyprus to the extent that the gain derives from the company’s real estate assets. Laws 119(I) of 2013 and Law 120(I) of 2013 have been amended to the Capital Gains Tax Law (“CGT Law”).
The said amendments to the CGT Law made two important provisions: (a) the definition gains was widened to include gains accrued from a disposal of rights derived from a contract of sale of real estate property (such as an assignment of rights), and (b) it was confirmed that the value of the property for the purposes of calculating capital gains tax, is to be determined in accordance with, not only the general valuation as at 1st January 1980 but also with other relevant provisions of the Immovable Property (Tenure, Registration and Valuation) Law.