Guide to individual taxes in Cyprus – Capital gains tax

As mentioned in our previous blog, there are many benefits with the tax regime of Cyprus. In this article, we will detail how much tax you need to pay on investments, pensions and rental income.

Defence contributions – 17 years exemption

The defence tax applies to worldwide investment income of individuals who are resident and domiciled in Cyprus, at the following rates.

  • Interest – 30% (reduced to 3% if your income is less than €12,000)
  • Dividends 17%
  • Rental income – 3% (on 75% of gross income)

Non-Cyprus domiciles are exempt from defence tax. Generally speaking, you will be considered Cyprus-domiciled if you were born there, or you have been resident for 17 out of the last 20 years.

Capital gains tax

In Cyprus, capital gains tax is only payable on gains arising on the sale of real estate located in Cyprus, with a rate of 20%. In other words, property elsewhere is exempt.

Those gains made on the sale of shares are generally not taxed in Cyprus. Unlisted shares of companies which own real estate in Cyprus are taxable. Besides, there is no capital gains tax on death, or on the transfer of assets between spouses and family members up to the third degree.

Estate planning

One thing you need to be careful about is Cyprus’ succession law, which imposes ‘forced heirship’ rules. The bulk of your estate will be divided among direct family members and cannot be left feely to whomever you like.

However, there is an EU succession regulation that allows foreign nationals to opt, through their will, for the succession law of their country of nationality to apply on their death, instead of that of their country of residence. Seek specialist advice on what would work best for your family and heirs.

Inheritance tax

There is no inheritance or succession tax here. Your assets can pass to your heirs without them having to pay any local tax. However, this does not mean that expatriates can escape death taxes completely. Take specialist advice first to establish how to avoid or mitigate this tax.


It is recommended to check your pension funds when you move to Cyprus. There are many options for your pensions these days and you need to understand how they all work and consider which would be best for you. The Cyprus tax regime can provide opportunities for retired expatriates.

While Cyprus taxation appears relatively straightforward, do take specialist advice to make sure you understand how all the rules affect you. 5B Five Bravo has offices in both Canada and Cyprus, and can help you plan your move to the island and make sure you take advantage of all the tax benefits Cyprus to offer. If any questions, please contact our advisers for personalised advice.