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Since it joined the European Union in 2004, Cyprus has become something of a tax haven for new residents. UK citizens who choose to settle in Cyprus can cut up to 70% off their income tax bill and, thanks to a much lower cost of living than many other European countries, enjoy a much higher standard of life. Cyprus has Double Taxation treaties with many countries, including Great Britain, which protect you from paying tax in both nations. The banking system has become much more liberal, making it easier to move funds in and out of the country, and international banks are beginning to move in giving residents much greater choice. What’s more, interest on foreign money deposited in Cypriot banks by non-residents is completely tax-free. However, all the legislations and loopholes that exist can seem very confusing, and you should consult an Independent Financial Advisor to make sure you take full advantage of the opportunities available.
The most important taxes are listed below: Income Tax – Payable on individual income Business. Tax will be payable on income earned in Cyprus and overseas but expecting a salary received overseas by an individual who meets the test of “permanent resident” of Cyprus. A foreign resident who is employed in Cyprus pays tax only on income earned in Cyprus. To be considered a resident of Cyprus, residence of at least 183 days in Cyprus during any calendar tax year must be established or a life that is centered in Cyprus. The tax rates are as follows: FROM | TO | % | | | Up to 17,800 Euros | 0% | | 17,801 Euros | 25,629 Euros | 20% | | 25,630 Euros | 34,172 Euros | 25% | | 34,173 Euros | AND OVER | 30% |
Company Tax – Paid at a percentage of profits by partnerships and registered companies. The 10% corporate tax gives Cyprus the lowest rate in the EU, after Ireland (12.5%), with the exception of the Isle of Man, Jersery and Guernsey, which have all announced a nil rate - but these islands are not in the EU anyway for most purposes. Immovable Property Tax – This tax is imposed annually at the following rates on the current market value of immovable property situated in Cyprus and owned as at the 1st January each year: FROM | TO | % | | 0 | 170,860 Euros | 0% | | 170,861 Euros | 427,150 Euros | 2.5% | | 427,151 Euros | 854,300 Euros | 3.5% | | OVER | 854,300 Euros | 4% |
Wealth Tax – Net Worth Tax is not imposed in Cyprus. Capital Gains Tax – Paid on the profits from the sale of property. Proceeds from the sale less the cost of proerty, professional and legal fees, commission, interest paid, inflation allowance and investment allowance (17,086 Euros on disposal of any property and 85,430 Euros on disposal of residential property). The Investment allowance can only be exhausted once, and is granted to each owner of the property. So for example if the property is owned by a husband and wife the allowance would be 34,172 Euros. Inheritance and Gift Tax – Is not imposed in Cyprus. Local Services Tax – Paid twice a year by all resident and non-resident property owners. The tax covers the cost of refuse disposal, street lighting etc and ranges between 50 Euros – 170 Euros per year depending on the size of the property. Value Added Tax – Paid on goods and services at varying rates.
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