Capital gains tax

Capital gains tax is imposed at the rate of 20% on:

• Gains from the disposal of immovable property situated in the Republic,
• Gains from the disposal of shares of companies not listed on a recognised stock exchange which own immovable property situated in the Republic, and
• Gains from the disposal of shares of companies which indirectly own immovable property situated in the Republic and derive at least 50% of their market value from such immovable property. In computing the capital gain, the following are deducted from the sale proceeds:

– The value of the immovable property as it were on the 1st January 1980 or cost, if the date of acquisition is later, as adjusted for inflation

– The cost of any additions after 1st January 1980 or the date of acquisition if later, as adjusted for inflation

– Certain expenditure incurred for the production of the gain

Exemptions

The following disposals of immovable property are exempt from capital gains tax:

• Transfer upon death
• Gifts between spouses, parents and children and relatives up to third degree of kindred
• Gift to a company whose shareholders are members of the donor’s family and continue to be members of the family for a period of five years from the date of the gift
• Gift by a family company to its shareholders, if the company had also acquired the property in question via donation. However, if the shareholder disposes the property within 3 years then the shareholder will not be entitled to the deductions listed below
• Gift to a charitable organisation or to the Republic or to a political party
• Exchange or disposal under the Agricultural Land (Consolidation) Laws
• Exchange provided the gain is used for the acquisition of new property. The gain derived from the exchange reduces the cost of the new property and the tax is paid when the latter is disposed
• Expropriations
• Transfer of ownership or share transfers in the event of company reorganisations
• Transfer of property of a missing person under administration
• Transfer of ownership between spouses in which their marriage has been dissolved by a court order or in case of transfer of ownership between the same persons for the purpose of settling their property according to the Settlement of Property Relationships between Spouses Law

Deductions

Individuals are entitled to deduct the following lifetime deductions from the gains:

• Disposal of principal private residence 85.430 (subject to conditions)
• Disposal of agricultural land by a farmer 25.629
• Other disposals 17.086