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| Cyprus is
unique when it comes to the taxation aspects of living
on the island. Cyprus has conducted treaties for the avoidance
of double taxation with the UK, USA and other European
countries. |
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| The main purpose of these treaties
is the avoidance of double taxation of income earned in
any of these countries. For example, UK citizens may take
advantage of the double Taxation Treaty existing between
the UK and Cyprus. This enables you to receive your pensions
and investment income in Cyprus FREE of UK withholding
tax. This treaty is unique to Cyprus since it includes
both public and private sector pensions. |
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| Furthermore, Cyprus taxes the assets
of expatriates only on a remittance basis. Many expatriates
can therefore keep assets growing free of tax in an offshore
bank, investments or trust, and simply bring into Cyprus
what they need. The remittance system compares extremely
well with the more common world-arising tax system, used
in many other countries, including favoured sunspots like
Spain. Recent tax reforms sharply reduce the tax burden
in alien residents, in recognition of their value to the
economy. |
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| Individual alien residents are now
taxed on a flat rate basis of 5% per annum on pension
and investment income brought into Cyprus. In special
circumstances exemptions totalling up to CYP £4,000
per person or CYP £8,000 per married couple may
apply. Consequently, the total tax burden on alien residents
is in practice often only 3%. This compares dazzlingly
with competing destinations where property owners are
subject to high tax exposure up to levels of 60%. |
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Insurance pensions can be paid to
retirees in Cyprus on a similar tax free basis, and
are index linked by virtue of the Reciprocal Agreement,
compared to their 'frozen' status in other overseas
destinations.
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| Income Tax |
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| According to the Cyprus and UK taxation
systems you are obliged to declare your income from pension
or any other sources to tax authorities. There are two
groups of taxed income, as follows: |
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a) Those that have income from other
sources other than a pension are taxed at 5% income
tax, exempt the first CYP £2,000 (two thousand
pounds)
b) Those that have income from their
pension are taxed at 5% income tax, exempt the first
CYP £6,000 (six thousand pounds)
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DND
tries to give an accurate picture of the fiscal rules that apply
in Cyprus but cannot be held accountable or liable for any
omissions, accuracy, or changes. |
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