Taxation

Cyprus is regarded as a low tax regime, and has a system similar to the UK’s. Fortunately there is a double taxation agreement between the two countries, meaning that tax is paid in one or other country, not both, and usually in the country where the higher rate is levied.

Non­residents are subject to income tax only on income earned in Cyprus. This includes income from letting property, which is taxed at progressive rates of up to 30 per cent, depending on the amount. Non­residents may also be liable for capital gains tax (CGT) on the profit from the sale of a property, according to individual circumstances. Property sales are subject to CGT at a rate of 20 per cent on the gain, although the first CYP 10,000 of the gain is exempt.

In Cyprus, for non­residents and residents alike, there is no gift tax or inheritance tax. A sensible position to have. A foreign national staying in Cyprus for more than 183 days during a tax year (1 January to 31 December) is considered a resident. The 183 days need not be consecutive.

Residents of Cyprus are subject to a rising scale of taxation on worldwide income:

• Income of up to CYP 10,000 (£12,000 sterling) is not taxable.
• Income of CYP 10,000 – CYP 20,000 is taxed at bands of between 20 and 25 per cent.
• Income over CYP 30,000 is taxed at 30%

Residents of Cyprus are also subject to other taxes, including a contribution for passive income, for example rental income.

VAT at a rate of 15 per cent is levied on most goods; a reduced rate of VAT of 5 per cent is charged on some products, mainly food and agricultural products.

Local taxes The annual Immovable Property Ownership Tax amounts to approximately CYP 50 to CYP 150, depending on the value of the property.

An annual tax of CYP 20 to CYP 30 may also be levied by the municipal authorities, as may a sewage tax of CYP 20 to CYP 40.

Immigrant retirees are permitted to import personal effects, including household goods and furniture that are for personal use and that have been used (i.e. are not brand new). Additionally, no duty is charged on the importation of a car, and retirement age immigrants are granted the concession of not being charged duty on two cars.