|
|
Value
|
Stamp Duty
(% per
CY
£
)
|
Stamp Duty Cost
|
|
The First
|
CY
£ 100,000
|
1.5%
|
CY
£
150
|
|
The Next
|
CY
£ 50,000
|
2.0%
|
CY
£ 100
|
|
|
|
Total
|
CY
£
250
|
Local Authority Taxes and Rates
As a rule, not more than CY £ 200 yearly. These taxes and rates include street
lighting, sewerage, garbage collection, etc…
The Title Deed
Transfer of the property bought may be affected only through a formal
declaration of sale in a
District Land Office, in the presence of both parties. A lawful agent through a
written power of attorney may represent any party.
Transferring the ownership requires two permits:
a) From the Council of Ministers and,
b) From the Central Bank of Cyprus.
In the case of the non-Cypriot, a prerequisite of registration is evidence that
the property has been paid for with foreign exchange. When one purchases a house or a piece of
land, the owner (vendor) as a rule must have a title deed in his own name, which can be transferred
to the purchaser. These are some important issues, which the purchaser's solicitor must take into
consideration and embody in the contract.
Taxation
There are substantial tax advantages for
U.K. citizens retiring to Cyprus.
The U.K. / Cyprus double taxation treaty, which is unique in this respect, enables
United Kingdom pensioners to remit both government as well as private sector occupational pensions
to Cyprus free of withholding taxes in the United Kingdom.
In practically all other United Kingdom double taxation treaties government
pensions are almost always subject to withholding taxes at source. Hence the relief offered to
British government pensioners resident in Cyprus is unique to Cyprus and generally not available
elsewhere under the terms of other U.K. double taxation treaties.
Foreign retirees pay income tax at the rate of 5% per annum on all imported
pensions, with an annual exemption of the first CY £ 2,000.
Estimated Savings
Assume United Kingdom pension of UK £ 20.000 per annum.
United Kingdom withholding taxes would therefore be UK £ 5.000.
The above pension remitted to Cyprus income tax in Cyprus would be only UK £
875.
Gross saving in respect of United Kingdom income tax UK £ 4,125.
Tax Benefits
The United Kingdom also maintains a reciprocal agreement with Cyprus in respect
of National Insurance pension's benefits, which in the hands of foreign retirees living in Cyprus
remain index linked.
Increasingly, Cyprus is used as a residential base for former residents of the
U.K. Who wish to restructure their personal assets in a favourable tax jurisdiction, where U.K.
capital gains tax and income tax exposure can be effectively and legally minimized? The potential
tax advantages for retirees are thus truly substantial and the use of Cyprus as a fiscal base for
retirees of all nationalities should not be ignored.
Income Tax
The tax rates for individuals are as follows:
|
Taxable Income
CY
£
|
Tax Rate %
|
Tax
CY
£
|
Cumulative Tax
CY
£
|
|
0 – 10.000
|
0
|
0
|
0
|
|
10.001 – 15.000
|
20
|
1.000
|
1.000
|
|
15.001 – 20.000
|
25
|
1.250
|
2.250
|
|
20.001 and over
|
30
|
|
|
Capital Gains Tax
Capital gains tax is imposed only on immovable property situated in Cyprus or
share of capital which own immovable property situated in Cyprus.
On disposal of the property, capital gains tax will be payable at the rate of
20% on the gain with the first CY £ 10,000 being exempt for each person. There is also an
indexation allowance.
On top of this allowance, the seller is entitled to a further allowance
regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the
house.
Gains from the disposal of a dwelling house are exempt up to CY £ 50,000 in
total if the owner resides in it continuously for at least five years prior to disposal.
All exemptions are lifetime.
Corporation Tax
The Cyprus tax legislation complies with the EU regulations and the OECD
requirements against harmful tax practices. Cyprus’ accession to the EU combined with an attractive
tax system make Cyprus an ideal jurisdiction through which to conduct international
business.
All companies are subject to corporate tax at a rate of 10%. This is the lowest
corporate tax rate in Europe.
Value Added Tax
Cyprus had adopted all the provisions of 6
th EU Directive regarding VAT as from 1 May 2004.
Value Added Tax is imposed on the provision of goods and services in Cyprus as
well as on the importation of goods into Cyprus up to 30 April 2004. Since 1 May 2004 VAT is
imposed on importation of goods from Non-EU member states only.
|
Rates
|
|
|
Standard rate
|
15%
|
|
Reduced rate
|
5%
|
|
Zero rate
|
0%
|
Standard Rate
The standard rate applies to any provision of goods and services in Cyprus not
subject to the zero rates, the reduced rate or is exempt. As from 1 May 2004 children's clothing
and footwear are taxed with the standard rate of VAT at 15%.
Reduced Rate
The reduced rate applies to hotel services, to provision of food in the course
of catering, fertilisers, animal food and pesticides. As from 1 May 2004 the reduced rate apply
also to newspaper, magazines and books, public bus transports, nuts etc.
Zero Rates
Zero rated supplies include the provisions of food supplies, medicines, export
to third countries etc.
Exemptions
Exempt supplies include rental of immovable property, financial services,
hospital and medical services, postal services, insurance services etc.
VAT on Immovable Property
As from 1 May 2004, VAT was imposed on the sale of new buildings at a rate of
15%. Exemption to the above is the sale of residential building which will be used as the first
residence which will be taxed at 5% under certain conditions which are expected to be issued by the
Ministry of Finance.
Tax Advantages
Cyprus is unique when it comes to the taxation aspects of living on the island.
Retirees who become residents in Cyprus are taxed on their pensions from abroad at the rate of 5%
for amount: exceeding CY £ 2,000 annually. Of course as for all Cypriot tax residents their total
annual income up to CY £ 10,000 (as from 2004) is tax exempt. Additionally, Cyprus has Double
Taxation treaties with many European and other countries, safe-guarding its residents from paying
tax in both countries. This gives the option to the citizens of those countries to take advantage
of the very low rate in Cyprus.
Double Taxation Agreements
Cyprus has double-taxation agreements with Austria, Bulgaria, Canada the
People's Republic of China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary,
India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Belarus, Russia, (Armenia,
Kyrgyzstan Moldova, Uzbekistan, Tajikistan and Ukraine) Slovakia, South Africa, Sweden, Syria, the
United Kingdom, the United States, Yugoslavia Belgium, Denmark, Lebanon, Mauritius, Singapore,
Thailand.
The main purpose of these treaties is the avoidance of double taxation of income
earned in any of the above countries. A credit is usually allowed against the tax levied by the
country of the tax payer's residence for taxes levied in the other country.
Selling your Property
You can sell the property at any time and with no restrictions. However there
are two different cases:
a) If the property is sold to a non-Cypriot who is paying from external funds,
then the whole amount can be repatriated without any requirements,
b) If the property is sold to a Cypriot, who is paying in Cyprus pounds then the
seller is entitled to repatriate an amount equal to:
1) what he paid to buy the property,
2) plus any other (proved) costs involved with
additions or extensions of the property,
3) plus the transfer fees,
4) plus the inflation,
5) plus CY £ 50,000 (fifty thousand pounds) per person
per year.
Residential Permit
Residential Permit is easily obtained for persons living in Cyprus, who have purchased
property.
Temporary Permit: The granting of this permit requires the existence of a bank
account in Cyprus and a sales agreement of the property purchased. Temporary residence status can
be from one to four years.
Permanent Permit: In addition to the above requirements, the applicant must
establish evidence of a secured annual income of not less than CY £ 5,300 (five thousand three
hundred Cyprus pounds) for a couple.
Non-Cypriots wishing to reside permanently in Cyprus must apply to the Committee
of Aliens Control. To obtain residence permission a Non-Cypriot should fall in the following
categories:
CATEGORY A: In this category are included people who are interested to open an
offshore office in Cyprus.
CATEGORY B: In this category are included self-employed foreigners who are
interested to open their own business in Cyprus on the condition that their operations will not
have negative impact on the economy of Cyprus. Additionally the minimum capital required is CY £
150,000.
CATEGORY C: In this category are included Non-Cypriots who are interested to be
employed in Cyprus by a Cypriot employer. Permission is granted on the condition that their
employment will not lead to an increase in the local unemployment in the profession they will
practice.
CATEGORY D: In this category are included foreigners not employed in Cyprus
however would like to reside permanently in Cyprus. Permission will be granted on the condition
that they have received from abroad and is no less than CY £ 3,800.
Non-Cypriots wishing to take up employment in Cyprus are required to have a
permit under the Aliens and Immigration Law.
Temporary residence is easy to obtain once the applicant fulfils certain
requirements. To apply for temporary residence a visit to the local immigration office should be
arranged and produce the following documents:
a) A certificate from a local bank stating that the applicant is a holder of an
external account at that bank and stating the balance of the account. Obviously, the larger the
balance, the more favourably the applicant will be seen.
b) Passport.
c) 3 photos.
d) CY £ 20.
e) Copy of Rental Agreement or Sales Contract.
Imprint