The 2026 Cyprus tax reform brings important changes for real estate investors, developers, funds and high‑net‑worth buyers. It affects transaction costs, capital gains and how property‑related structures are taxed.
1. Stamp Duty Abolished from 1 January 2026
From 1 January 2026, stamp duty under the Stamp Duty Law is abolished. This includes stamp duty on most contracts and documents that previously had to be stamped, such as sale and purchase and lease agreements.
For buyers and developers this means:
- No stamp duty on new sale and purchase and lease agreements.
- Lower overall transaction costs
- Faster administration & conclusion of real estate transactions
There is still some uncertainty around documents signed abroad before 31 December 2025 but brought to Cyprus after 1 January 2026, so timing and documentation should be reviewed in each case.
2. Capital Gains Tax on Real Estate and “Property‑Rich” Companies
The Capital Gains Tax (CGT) Law now includes a definition of “immovable property” aligned with the Immovable Property Law. This brings consistency across real estate legislation in Cyprus.
The threshold for “property‑rich” companies has been reduced. Shares in a Company will now fall within the CGT net if at least 20% of their value is derived, directly or indirectly, from immovable property in Cyprus, instead of 50% previously. In addition:
- When shares of a property‑rich company are sold, the consideration for CGT purposes is adjusted by reference to the fair market value of the underlying assets, including the real estate.
- Capital gains on shares listed on a regulated market of a recognised stock exchange remain exempt from CGT.
- For shares listed on an unregulated market, there is an annual €50,000 threshold; gains above this may be taxed, with grandfathering for certain shares held as at 31 December 2025.
These rules are particularly relevant for investors who use companies to hold Cyprus property and then dispose of shares instead of the property itself.
3. Higher CGT Exemptions for Individuals
For individuals, several lifetime capital gains exemptions have been increased:
- General exemption: from €17,086 to €30,000.
- Agricultural land exemption: from €25,629 to €50,000.
- Primary residence exemption: from €85,430 to €150,000.
There is also a higher exemption (up to €450,000) for certain transfers in the context of debt restructurings involving a primary residence, subject to conditions.
These changes can reduce the CGT burden for individuals selling property, especially in a market where values have risen in recent years. The exact relief depends on each person’s history of claims and how the property has been used.
4. Corporate Tax, Development Profits and Losses Carry‑Forward
Companies developing real estate in Cyprus are subject to corporate tax rather than CGT. From 2026:
- The corporate tax rate increases from 12.5% to 15%.
- Tax losses can be carried forward for 7 years instead of 5.
For development companies, this means that losses from early years of a project or from slower markets can be used against profits for a longer period. This can be relevant for multi‑year residential or mixed‑use projects where sales and profits arise later in the development cycle.
5. Practical points for Property Owners and Developers
In light of these changes, property‑focused businesses may wish to:
- Review ongoing and planned transactions in view of the stamp duty abolition and CGT rules.
- Check how property is held (directly or via companies) and whether the 20% “property‑rich” threshold could apply.
- For individuals, consider how the increased CGT exemptions for primary residence, agricultural land and other disposals may apply in their circumstances.
- For developers, update business plans and cash‑flow models for the 15% corporate tax rate and the 7‑year loss carry‑forward.
Contact us today to assist you with developing, acquiring, selling or leasing land in Cyprus.
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📧 Email us: info@paraschou.com.cy
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This article is provided for general information purposes only and does not constitute legal, tax, or other professional advice. It should not be relied upon as a substitute for specific advice on any individual matter or transaction. Professional advice should be obtained before acting or refraining from acting on the basis of any information contained herein.
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