If there weren’t already enough reasons for spending the rest of your days living in Cyprus, you might be interested to hear that your family won’t pay a cent of inheritance tax on your estate if you can prove the island is your home for life.
Benjamin Franklin famously declared that “in this world nothing is certain but death and taxes”. Despite both being inevitable outcome for us all, estate planning is a sensitive issue that most of us put off until another day – especially when moving to another country. Let’s face it, who wants think about anything other than enjoying the sun and warm Mediterranean seas for ever when making the move to Cyprus?
Considering how much inheritance tax your family will have to pay should be near the top of your checklist of things to research before making the move to Cyprus.
But considering how much inheritance tax your family will have to pay should be near the top of your checklist of things to research before making the move to Cyprus. A failure to address important issues such as this could leave your nearest and dearest out of pocket in the future.
Here’s a summary of the inheritance tax system in Cyprus and how it impacts expats – you might be pleasantly surprised.
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Let’s start by looking at whether you will be liable for UK inheritance tax if you make the move to Cyprus. To do this we need to understand what domicile means in the context of the Cypriot rules of inheritance. This is because these rules, rather than the UK equivalent, will apply to any person who is domiciled in Cyprus and any person who holds immovable property there.
It’s important to make it clear that domicile means more than permanent resident. Such status refers to an individual who not only lives in Cyprus but can prove that he or she intends on spending the rest their life there.
If you are ready to buy in Cyprus, you’ll have a few financial matters to sort out. For advice on getting the best currency deal download the Property Buyer’s Guide to Currency.
If you claim to be a non-UK domicile, especially if you were born in the UK, HM Customs and Excise might want to enquire whether or not that is correct by conducting an in-depth examination of your background, lifestyle and intentions over the course of your lifetime.
Here’s an example of the type of factors that they will evaluate:
• your intentions
• your permanent residence
• your business interests
• your social and family interests
• your ownership of property
• the form of any Will you have made
If you fail to convince them of this you will be left exposed to the UK rules of inheritance, where a hefty 40% tax is imposed on anyone inheriting assets above a certain threshold.
Inheritance and gift tax was abolished in Cyprus in 2001.
Here’s the interesting part. If you are able to prove you are a non-UK domicile, meaning the Cypriot laws of inheritance apply to your estate, your family won’t need to pay a cent of inheritance tax. Why? Because inheritance and gift tax was abolished in Cyprus in 2001. In which case you can rest assured they will be left with much more money in the bank compared to the same situation in the UK.
When you’re ready to get serious about buying in Cyprus and would like to be put in touch with a trusted and recommended local lawyer, call the Cyprus Buying Guide resource team on 020 7898 0549 or email [email protected]. We are waiting for your call.
It is worth noting that property transfer fees are imposed by the Land Registry office, in order to transfer freehold ownership to the name of the family member(s) inheriting the property. The rates are on a graduated scale:
|Value of Property (€)||Transfer Fee Rate (%)|
|up to 85,000||3|
|from 85,001 to 170,000||5|
|from 170,001 and over||8|
The Cyprus Buying Guide takes you through each stage of the property buying process, with practical recommendations from our experts who have been through the process themselves. The guide will help you to: