Taxes In Cyprus For Expat Residents
Find out how much tax you have to pay in South and North Cyprus, and how retirees can benefit from Cyprus lenient taxation policies.
Both South and North Cyprus tax their residents using a tiered taxation system. Both sides also offer special conditions to expat retirees. In this guide, you will find out how much tax you may have to pay when you become a tax resident in Cyprus.
Tax in Cyprus for Expats
1. Is Cyprus a tax haven?
Cyprus is known as a low-tax destination with significant tax advantages for expats and businesses, but officially it is not considered a tax haven.
Both South and North Cyprus offer great tax incentives for expat retirees making them very attractive retirement destinations.
2. North Cyprus taxes for expats.
There is not any tax treaty between the UK and the TRNC and this makes the whole situation a bit more complicated.
If you live in the TRNC for more than 6 months a year, you are considered a tax resident.
3. How is my pension taxed in North Cyprus?
The government of North Cyprus does not tax foreign pensions.
Prior to leaving the UK, among other things you should inform your pension provider and then register in North Cyprus for tax purposes. Thus you will be able to receive your UK pension gross and yet not be taxed on it in the TRNC either.
Another advantage is that the TRNC has not signed up to the European Savings Tax Directive. This means you can legally keep your money in offshore accounts and bring in only what you need.
4. Income tax in North Cyprus.
As a tax resident of North Cyprus, you must pay income tax on all the income that derives from your North Cyprus activities and on all the money you bring into North Cyprus from abroad.
Any earnings made in the TRNC, such as income from property letting or from bank interest, are taxable.
It’s a tiered system with tax rates from 10 to 37 percent depending on your income.
5. Annual property tax.
You will pay 1.25 Turkish Lira per 1 sq.m. of the covered area of your property in an annual property tax.
You don’t have to pay Capital Gains Tax if you sell your property for the first time provided the plot of land is less than one donum.
If you are not a first-time seller you will pay Capital Gains Tax at the rate of 3.5% for property sales.
Tax issues in the TRNC are complex. To be on the safe side it’s best to consult our specialists.
It is also important to have two wills in place: one in the UK, and the other in the TRNC to cover your TRNC property and bank account.
According to North Cyprus laws, if one of the partners in a marriage or relationship dies intestate (i.e. without leaving a will) the remaining spouse will not automatically inherit the estate if there are surviving children. I.e., the laws of succession differ from those in the UK.
To cover your assets and property in North Cyprus, you need to prepare and sign your will with a lawyer in the TRNC.