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Tax in Cyprus

 

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.

  • 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.

 

Golf-Wohnen-Mittelmeer | nicole@propertydreamcyprus.com 
tel: +357 26 27 04 83 | handy: +357 99 43 73 28
mail: 55, Griva Digeni, Suite 73, 8220 Chlorakas, Zypern

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