Notes on Cyprus Income Tax Law as it Affects Aliens |
| A | Cyprus has entered into agreement with most other countries to avoid double taxation. This in effect means that foreign property buyers who live in Cyprus, i.e are considered residents of Cyprus, may elect to pay Income Tax in Cyprus instead of in the country from which their income is derived. Amongst these countries with double Taxation relief agreements are most of the European Union countries (the U.K included), U.S.A., Canada, etc.* |
| B | The Government of Cyprus, in order to attract foreign
retirees into Cyprus, offers extremely attractive tax rates for foreigners who elect to
become residents of Cyprus. Such rates are as follow:
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| 1. INCOME TAX Retired expatriates, residents of Cyprus, pay tax in Cyprus at extremely low rates. The first C£2,000 of remitted income per year is free of tax, with anything over and above taxed at a flat rate of just 5 per cent. Usually double taxation agreements provide that they do not pay tax in their country of origin. U.K pensions are totally exempt from withholding taxes at source provided the pension is 100 per cent remitted to Cyprus. As an example for £10,000 per year brought into Cyprus from the U.K, the Income Tax payable is only £400.
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| 2. CAPITAL GAINS TAX FOR NON-CYPRIOT PROPERTY
OWNERS RESIDENTS OF CYPRUS. Property buyers, residents of Cyprus, who dispose their property after 13/7/1990 are liable to 20% tax on the Capital Gains after indexation allowance on cost. Life time allowances are available as follows: C£10,000 are allowed off the chargeable Capital Gain on any property. Subject to certain conditions C£50,000 are allowed off the chargeable Capital Gain from the disposal of a main residence. For more details on Capital Gains Tax please ask for our separate leaflet or send us an e-mail .
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| 3. ESTATE DUTY Please ask for our separate leaflet or send us an e-mail.
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| 4. OFFSHORE COMPANIES Offshore companies are taxed at a rate of 4.25%. No tax on dividends. Alien employees of offshore companies working in Cyprus pay tax at 50% of that payable by local employees, while those working abroad pay tax at 10% of normal rates and no tax at at all if their salary is remitted to them through Cyprus.
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| * | Double taxation relief agreements now exist with: Austria,
Bulgaria, Canada, China, Czech & Slovakian Republics, Denmark, France, Germany,
Greece, Hungary, Ireland, Italy, Kuwait, Norway, Romania, Sweden, United Kingdom, USA,
Russia & C.I. States, and Yugoslavia. Pending ratifications: Egypt, Malta, Syria, Poland. Pending signature: Belgium, India, Finland. |