Banking, Money and Taxes in Cyprus
imagined.Income taxes in Cyprus are paid according to a progressive sliding scale; the higher your income the higher rate of tax you'll pay. As of 2010 citizens and residents paid between 20% and 30% in income tax, non-residents are exempt from this tax.
For the most part though, the tax laws are most beneficial for those who have done their time in the grind, and who have come to Cyprus for rest and relaxation - not employment.
Must pensioners pay tax in Cyprus?
Since Cyprus joined the European Union (EU) in 2004, it became both convenient and financially efficient for British citizens to have their pension paid out here rather than the United Kingdom. In Cyprus, British pensioners are only taxed at 5% by the Ministry of Finance, making for a 17% rise in income as compared to what would have been received in Britain.
In order to qualify it is necessary to live in the nation for a minimum of 183 days per year.
Such a substantial tax advantage comes as a result of a unique double taxation treaty which enables British citizens to remit both government and private pensions to Cyprus without having to withhold taxes in the UK. In nearly every other country, laws demand that taxes also be withheld at source (the UK).
As if this deal isn't sweet enough, expats are given an annual exemption of the first 2,000 Cyprus Pounds.
Furthermore, as Cyprus only levies taxes on a remittance basis, meaning that the government only taxes assets brought into Cyprus, UK residents can restructure their personal assets so that capital gains tax and income tax overall is at a minimum.
Also, those expats planning to buy property in Cyprus will be ecstatic to find that no capital gains tax is charged on money needed for this purchase or for any other similar capital asset expenditure.
Lastly, inheritance tax in Cyprus has been abolished.
