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Cyprus has very favourable tax rates particularly for the retired
expatriate.
You are considered a
resident for tax purposes in Cyprus if you reside here 183 days or
more in each tax year.
Registering as a Taxpayer
On arrival in Cyprus you
should visit your local immigration office to apply for your
residence permit. The requirements change often but currently an EU
citizen will need 4 passport size photographs, evidence of your
Cyprus residence (rental agreement or contract of sale) and evidence
that you have private medical insurance. There may be other
requirements if you are a non-EU citizen. There are many agents,
accountants and lawyers who, for a small fee, will arrange this for
you.
Once you have your
Residence Permit (fondly known for many years as your 'Pink Slip'
but are now yellow!) you will be in a position to visit your local
income tax office to register.
Once this has been
achieved UK citizens will be able to complete the necessary UK
Inland Revenue forms to have pension income and bank interest from
the UK paid gross without the deduction of UK tax.
Citizens of other
countries whether EU countries or non-EU countries should speak with
the tax authority of that particular country to ascertain whether
they too can obtain gross receipts of income from that country. Much
will depend on whether Cyprus has a double taxation agreement with
that country and the tax rules of the country in question.
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For information on Cyprus's Double Taxation Agreements go to the
Cyprus
Ministry of Finance website.
Once you are eligible to
become a taxpayer in Cyprus there is one of two tax bands that will
be applied to your income.
As a working taxpayer the
tax rates are as follows:
|
Amount of Income |
Tax Rate |
|
CYP 0 to 10,000 |
0% |
|
CYP 10 to 15,000 |
20% |
|
CYP 15 to 20,000 |
25% |
|
CYP 20,000 + |
30% |
As a retired tax payer you will have the choice to come under the
working tax payers' band as above or the retired tax payers band as
follows:
|
Amount of Pension Income |
Tax Rate |
|
CYP 0 to 2,000 |
0% |
|
CYP 2,000 + |
5% |
To be eligible for the Retirees tax bands you must not undertake
paid employment of any kind.
Other income such as bank interest and dividends from shares are
exempt from income tax, however they are taxable by way of Cyprus
Defence Levy (Special Contribution for Defence)
Cyprus Defence Levy
This tax is imposed on certain income earned by Cyprus tax
residents.
|
Type of Income |
Tax Rate |
|
Dividends from Cyprus Co's |
15% |
|
Dividends from Non Cyprus Co's |
15% |
|
Other Interest - Bank etc. |
10% |
Foreign Tax already deducted can be credited against the defence tax
liability.
Capital Gains Tax
Capital gains tax is imposed on gains from the disposal of immovable
property at a rate of 20%. There are certain exemptions and
indexation relief allowed.
There is no capital gains tax liability on the gains of investments.
Estate Duty (Inheritance Tax)
Estate Duty was abolished in Cyprus in January 2000.
UK expatriates be aware however that you are likely to be considered
as UK domiciled by the UK Inland Revenue even if you have resided
outside of the UK for some years. If your estate is worth more than
GBP 275,000 (current nil rate band as of July 2005) you may wish to
take advice in this regard. (This is a very detailed subject, please
contact tax professionals for further information.)
Financial Affairs
Becoming an expatriate brings many changes with regards to your
finances. It is advisable to consult with a financial adviser, who
is authorised and regulated in Cyprus and who has experience in
advising on these matters.
We have very good connections with carefully selected, reliable and
trustworthy, financial experts.
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