Download our tax guide to get answers to key questions for those looking to move or who have already moved to Cyprus.
This in-depth guide includes:
- What makes you tax resident?
- How much tax will you pay on investments, pensions and property income?
- Will you have to pay capital gains tax or IHT?
- Do I need a Cypriot Will?
- What are defence contributions?
FAQs
As a resident of Cyprus, you are subject to taxation on your global income. Various types of income, including bank interest and dividends, are taxed as “defence contributions.” Rental income is subject to both income tax and defence contributions.
The tax system in Cyprus provides a tax-free allowance of €19,500 for your first €19,500 of income. Any income beyond this threshold is subject to progressive tax rates. The tax rates start at 20% and increase gradually up to 35% for income exceeding €60,000.
Retirees planning to retire in Cyprus can enjoy favourable tax treatment for foreign pension income. They can choose between a flat rate of 5% tax on the excess of €3,420 (with this amount being exempt) or the normal scale rates of income tax. Under the UK/Cyprus double tax treaty, most pension income is taxable solely in Cyprus, except for government service pensions. However, until 2024, individuals living in Cyprus or planning to move there can elect to pay tax in Cyprus on UK government service pensions. Additionally, a pension commencement lump sum from a UK pension can be received tax-free in both Cyprus and the UK.
There is a potential tax exemption on interest and dividends for up to 17 years through ‘defence contributions.’ While rental income is subject to both income tax and defence contributions, non-Cyprus domiciles are exempt from these contributions. Generally, individuals are considered Cyprus-domiciled if they were born there or have been residents for 17 out of the last 20 years. As a result, most UK expatriates can avoid tax on interest and dividends during their initial 17 years of residence.
All the things you need to know
Our qualified tax advisers created this guide. With close to 4,000 expatriate and cross-border investor clients, we understand the pains of having assets split worldwide and have vast experience advising clients in this scenario. We have put together this easy-to-follow guide to help those investors taking the limited company route to help structure their finances.
This guide was last updated in June 2023.
