Capital Gains Tax in Cyprus

Capital gains tax in Cyprus has one of the narrowest scopes of any EU tax system. Unlike countries that tax gains on shares, bonds, funds, and other financial assets, Cyprus imposes capital gains tax only on profits from the disposal of immovable property located in Cyprus (or shares in companies that directly hold Cyprus immovable property). All other capital gains — including those from selling shares, securities, and other financial instruments — are exempt from CGT. Note: cryptocurrency disposals are subject to a separate flat 8% tax from 2026. This narrow scope is a significant benefit for investors and business owners, particularly when combined with the Non-Dom regime.

This narrow scope is not an oversight — it is a deliberate policy choice that has made Cyprus one of the most attractive jurisdictions in the world for investors, traders, and entrepreneurs who generate returns through financial markets, business exits, or portfolio management. Understanding exactly what is and what is not subject to CGT is essential for structuring your investments and business activities to maximise the benefit of this exemption.

What Is Taxed: The Narrow Scope

Cyprus capital gains tax at 20% applies exclusively to gains arising from the disposal of immovable property situated in Cyprus, and shares in companies whose value derives primarily (more than 50%) from immovable property situated in Cyprus. This means that if you sell a house, apartment, commercial building, or plot of land located in Cyprus at a profit, that profit is subject to the 20% CGT. Similarly, if you sell shares in a company that is essentially a Cyprus property holding vehicle (where more than half the company's value comes from Cyprus real estate), the gain is treated as a property gain and taxed at 20%.

The taxable gain is calculated as the sale price minus the original acquisition cost (adjusted for inflation using the official index), minus the cost of any improvements made to the property, minus allowable transfer costs (legal fees, agent commissions). Several important lifetime deductions further reduce the taxable amount: EUR 17,086 for the disposal of a primary residence, EUR 85,430 for gains from the disposal of qualifying agricultural land by farmers, and EUR 25,629 for other disposals. These are lifetime allowances, not annual allowances — once used, they are not renewed.

What Is Taxed: Immovable Property

Capital gains tax at 20% applies only to gains arising from the disposal of immovable property situated in Cyprus, shares in companies that own immovable property in Cyprus (where the property represents more than 50% of the company's assets), and shares in companies that indirectly hold Cyprus immovable property through a chain of participations. The tax is calculated on the difference between the sale price and the original acquisition cost (adjusted for inflation using the official price index), plus any approved improvements. Each individual has a lifetime exemption of EUR 17,086 on capital gains from property disposals.

What Is NOT Taxed: Everything Else

All other capital gains are exempt from tax in Cyprus. This includes gains from selling shares in any company (listed or unlisted, Cypriot or foreign), bonds, debentures, and other securities, units in investment funds and ETFs, options, futures, and other derivatives, and rights or interests in any of the above. This exemption applies at both the personal and corporate level. A Non-Dom individual selling a stock portfolio worth millions of euros pays zero capital gains tax in Cyprus.

Capital Gains and Non-Dom: The Combined Picture

A Non-Dom individual in Cyprus benefits from 0% on dividends (SDC exemption), 0% on interest (SDC exemption), 0% on capital gains from securities (general exemption), and 0% inheritance tax. The only personal-level taxes that apply are income tax on salary or business income (with the generous tax-free allowance and the 50% exemption for new residents) and social insurance contributions. This creates an extraordinarily tax-efficient environment for wealth building.

What Is NOT Taxed: The Broad Exemption

Everything else — and this is the powerful part — is exempt. The following types of capital gains are completely free from tax in Cyprus, regardless of the amount, the holding period, or the frequency of transactions:

Shares and securities: Gains from the sale of shares in any company (listed or unlisted, Cypriot or foreign) are exempt, provided the company does not derive more than 50% of its value from Cyprus immovable property. This exemption covers shares in operating businesses, investment companies, holding companies, and startups. An entrepreneur who builds a company worth EUR 10 million and sells it pays zero CGT in Cyprus.

Bonds, ETFs, and investment funds: Gains from all types of fixed-income securities, exchange-traded funds, mutual funds, and other collective investment instruments are exempt.

Cryptocurrency and digital assets: From 2026, gains from the disposal of crypto assets are subject to a flat 8% tax (previously CGT-exempt). The Cyprus Tax Department has not issued specific guidance classifying crypto as immovable property (which it obviously is not), and the general securities exemption applies.

Forex, CFDs, and derivatives: Gains from foreign exchange trading, contracts for difference, options, futures, and other derivative instruments are exempt. This is particularly relevant given Cyprus's position as the EU hub for the forex industry.

Foreign immovable property: Gains from the sale of property situated outside Cyprus are not subject to Cyprus CGT. A Non-Dom investor selling a property in Berlin, London, or Dubai pays no capital gains tax in Cyprus — though the property's country may impose its own CGT.

Planning Implications

The narrow CGT scope creates significant planning opportunities. For business owners considering an exit (selling their company), the zero CGT on share disposals means the entire exit proceeds are received tax-free at the personal level (provided the company is not primarily a Cyprus property vehicle). For investors, the ability to trade securities, and forex without CGT (note: crypto is subject to a separate 8% flat tax from 2026) makes Cyprus one of the most efficient jurisdictions globally for active portfolio management. And for property investors, structuring foreign property investments to ensure gains are realised outside Cyprus (which they are by default for foreign property) preserves the CGT exemption.

Related: Non-Dom Tax Benefits, Cyprus for Crypto Traders, Buying Property in Cyprus.

What Is Taxed and What Is Exempt

Cyprus's capital gains tax regime is notable for what it does not tax rather than what it does. The 20% CGT applies only to gains from the disposal of immovable property (land and buildings) located in Cyprus, and to gains from the disposal of shares in companies whose value derives primarily (more than 50%) from Cyprus immovable property. Everything else — gains from shares, bonds, securities, options, futures, crypto assets, foreign property — is subject to an 8% flat tax (since 2026).

This structure creates a clear planning opportunity: investment gains from financial instruments and foreign assets are entirely tax-free in Cyprus, while property gains are taxed at a moderate 20% rate with generous deductions and allowances. For investors and traders dealing primarily in securities, the zero-rate on capital gains is one of the most powerful features of the Cyprus tax system.

Exempt from CGT: Shares in listed and unlisted companies (regardless of jurisdiction), bonds and debentures, options and futures, cryptocurrency and digital assets, units in investment funds, gains from disposal of foreign immovable property (taxed in the property's jurisdiction, not Cyprus), and gains from the disposal of own-use motor vehicles.

Subject to 20% CGT: Gains from disposal of immovable property in Cyprus (land, buildings, apartments), gains from disposal of shares in companies whose value derives primarily from Cyprus immovable property, and gains from the disposal of rights over Cyprus immovable property.

Calculating CGT: Allowances and Deductions

The CGT calculation follows a specific methodology that can significantly reduce the taxable gain:

Step 1 — Determine the disposal proceeds: The actual sale price or, if the Tax Department considers the price not at arm's length, the market value at the time of disposal.

Step 2 — Determine the cost base: The original acquisition cost, indexed for inflation from 1 January 1980 to the date of disposal. The inflation index is published by the Cyprus Statistical Service. For properties acquired before 1980, the value as at 1 January 1980 is used as the cost base. This indexation can substantially reduce the taxable gain, particularly for properties held for many years.

Step 3 — Deduct allowable expenses: Transfer fees paid on acquisition, legal fees related to acquisition and disposal, improvements and additions to the property (documented with receipts), and interest paid on loans used to acquire or improve the property (up to the date the property generates income or is sold).

Step 4 — Apply lifetime allowances:

The most powerful deduction is the own-residence allowance of EUR 85,430 for individuals who have used the property as their primary residence for at least five years. Combined with inflation indexation and the general lifetime allowance, many property disposals by Non-Dom residents result in minimal or zero CGT liability.

Planning Strategies for Property Investors

Several legitimate strategies can minimise or eliminate CGT exposure on Cyprus property investments:

Corporate ownership: Hold investment property through a Cyprus company. When you want to exit the investment, sell the shares of the company (which holds the property) rather than the property itself. Share sales are exempt from CGT regardless of the underlying assets. The buyer obtains the property indirectly through the share purchase. This strategy is most effective for pure investment properties; for personal residences, direct ownership may be preferable to preserve the EUR 85,430 own-residence allowance.

Long-term holding: The inflation indexation from 1980 means that CGT erodes over time. A property purchased for EUR 200,000 in 2026 and sold for EUR 300,000 in 2040 would have a significantly reduced taxable gain after 15 years of inflation indexation, potentially reducing the effective tax rate well below the headline 20%.

Own-residence planning: If you live in a property for at least five years before selling, the EUR 85,430 allowance eliminates CGT on a significant portion of the gain. For Non-Dom residents who purchase a home upon arrival and sell after five years of residency, this allowance — combined with the general allowance and indexation — often eliminates CGT entirely on gains up to EUR 100,000–120,000.