Migration, Families, Inheritance, Make Wills, Tax Savings Today and Tomorrow

Sam Orgill of ProACT Partnership Summarising Cyprus Will & Inheritance Tax Changes for Expats

What a 6 months. Cyprus under scrutiny from the Troika came up with game changing tax changes that reposition Cyprus as a Tax Friendly location for Expats living, working, investing and retired abroad.

These changes impact on the laws of succession affecting Wills, Trusts, and in turn Property, Business and Investments. The EU inspired legal changes allow new ways to save inheritance tax, a tax residence with no saving or investment taxes, maintain a pension tax environment of 5% income tax, discounts in property taxes on purchase and capital gains exemptions on overseas Cyprus property sales.

How does this affect your Family planning for inheritance, business and overseas property investment?

Origins – Where you are From

The key driver to the change was the introduction into Cyprus law of a statutory definition of where you are from – domicile. If you are born in a country with parents from that country then your origin is that country – your domicile. You may be born in Ireland you’re your parents come to UK to bring you up but your origin is the home country Ireland.

If you live in Cyprus for 20 years (and a tax resident for at least 17 of those years) then your Domicile becomes your country of residence – Cyprus.

And so it will remain, unless you return to your home country, which would immediately become your country of domicile again. An Expat returning to the UK after 30 years in Dubai and Cyprus would immediately fall under UK domicile again.

If an expat left Cyprus after 25 years, as Cyprus domicile and lived in Spain, his domicile would remain Cyprus, unless he remained in Spain for 20 years plus or returned to his home country.

The UK, Ireland has not introduced such a definition of domicile. But the guidance for assessment of domicile for inheritance tax is the same rules.

A final footnote, there are ways to choose and force domicile issues. But that’s not for this article. Contact Us for a Free Review of Inheritance Tax

Inheritance Tax Saving

The EU legislation requires you to settle you worldwide estate in your country of habitual residence. This can be different to domicile or tax residence. It also allows for a certificate of succession to be issued between member states to confirm any settlement of an estate in another jurisdiction

This means it is more likely all overseas assets are included in any inheritance tax assessment.

Inheritance tax in Cyprus is 0% between to families, but taxes may apply when marriage or blood relations do not exist under Cypriot law.

If you choose UK law to settle your worldwide will & estate UK inheritance tax may well be applied.

Make a Will Family Protection

Blood relatives inherit in Cyprus law. The first level is spouse and blood children. Other ‘family’ members could be included or excluded. Relatives 4th removed could claim from an estate. Only if no such blood relatives exist would the spouse inherit the whole estate.

All Expats should review their Cyprus Wills. Contact Us for a Free Review Make a WIll

Savings and Investment Tax Saving

Defence levy Savings taxes are now 0% for all non-domiciled Cyprus investors and tax residents for savings, dividends, investments, property rental income and investments.

Because it is a 0% rate then tax at source in another country can be reclaimed – but the laws of that country may also retain that tax.

If you become domiciled in Cyprus then you must pay defence levy. Contact Us for a Free Review of Domicile & Inheritance Tax

Free Review – Inheritance & Saving Taxes

ProACT offer a Free Review of your family situation. Expats must make written changes of your Will if you want to use the succession rules of your home country. But consider the impact on inheritance tax at 40% in the UK or other countries. Consider who you want to benefit in your Will, is this possible with your arrangements?

How do you need to change your savings and investments to save tax on defence levy for bank interest, dividends, property rental?

Book a Free review. Contact Us for a Free Review Make a Will & Inheritance Tax

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