Q1. My brother is in the UK and is 100% owner of the shares in his company, which he may want to sell. He is thinking of coming to Cyprus permanently in September 2019. Is there any best time for him to do this as the shares do have some value?
A1. Hi John. You may be aware that in the UK the sale of shares is subject to Capital Gains tax. .However, there is no Capital gains tax on the sale of shares in the UK if you are not UK resident. In Cyprus, there is Capital gain tax only on gains arising from the sale of immovable property situated in Cyprus and shares in companies represented by immovable property situated in Cyprus. Therefore, the timing of the sale of his shares is critical. He needs to leave the UK before 5 April 2020, having agreed a ”deal” but not having made it legally binding. The sale of the shares should be completed after 5th April 2020. The UK tax year runs from 6th April to 5th April, therefore, he will be UK resident in the year to 5th April 2020 but will be non-resident in the UK for capital gain tax purposes from 6 April 2020. As the shares are to be legally sold say 30 April 2020 he will not be UK resident in the year the shares are sold and therefore there will be no UK Capital gains tax in the UK or Cyprus. Your brother must remain non-resident in the UK for five complete UK tax years. If he becomes resident in the UK within five years then the UK gain will be chargeable to Capital gains tax in the tax year of his return. As all this is complicated I would suggest he seeks professional advice prior to him selling the shares. Clearly Read would be happy to have a meeting with him.
Q2. I have been living in Cyprus for four years in the same property and am thinking of selling. What is the Capital gains tax position and are there any relief’s?
A2. Hi Jenny. The letter above confirms that in Cyprus Capital gains tax is chargeable on gains in respect of the sale of immovable property. The rate of the tax is 20%. There are allowances available for the disposal of principal private residence amounting to €85500, disposal of agricultural land amounting to €25650 and any other disposal of €17100. These allowances can only be used once and any combination should not exceed €85500. The allowance of €85500 only applies where the owner has exclusively used the property for their own habitation for a total period of at least five years and situated on land not exceeding 1.5 hectares. The period of use of the residence does not necessarily have to be continuous. The use may be interrupted, for example, during an absence overseas. The chargeable gain can be reduced by any capital losses made in the same year or from unrelieved capital losses brought forward from earlier years. As you have not lived there for five years you will only qualify for the €17,100 relief and therefore I would advise you not to sell until you have exceeded the five years.
Q3. I understand that my 2018 Cyprus tax return does not need to be submitted by 31 July 2019 –is that correct?
A3.Hi Mark. The 2018 Cyprus tax return needs to be filed in the Taxi net System by 31 July 2019 for employees and 30 September 2019 for self-employed, without audit