Consider This - Inheritance Tax for Expats Family Property
Consider This - Inheritance Tax for Expats Family Property
Sam Orgill of ProACT Partnership with Tax Saving Tips for Property Ownership
New EU Succession laws enforce radical change for Expats living and working abroad in the EU, or with assets in these countries. While the UK and Ireland have opted out of applying the EU Directive it still affects EU expats with tax residence or domicile in the EU. This means changes to the way you organise and plan your Family inheritance, business and overseas property investment assets and income? CONTACT US
Changes Keep Coming
The changes mean that you must settle your world-wide estate in the country you habitually ‘live’. This could be different to the country of your tax residence AND the country of your tax domicile (‘where you are from’)
Cyprus has 0% inheritance tax (IHT) so is a better place to pay inheritance tax than the UK where 40% applies. This depends on your domicile. Cyprus now define your domicile in law. If you are Cyprus Domiciled you pay 0% IHT.
If you are ‘non-dom’, not domiciled you also are now have Cyprus tax saving on bank interest, bond interest and dividends received. But by definition you then still have your home country domicile, eg 40% UK where you were born.
Your worldwide assets (including Cyprus Property) could be assessed for 40% UK IHT if you settle you Will & Estate under English law.
Inheritance Tax Changes
Currently there is no worldwide exchange of information on assets between countries including UK and Cyprus. So you could settle a Will for the UK anda Will for Cyprus Property separately and the UK taxman will not know of your Cyprus assets unless he investigates.
From 1st January 2017 international exchange of property and asset information will commence between countries. This will allow IHT assessors to review worldwide assets to ensure those domiciled in that country pay on total estate assets. This will draw Cyprus, Spain, French, Portugal and Greek properties into the UK taxman’s net
If you choose UK law to settle your worldwide will & estate UK inheritance tax may well be applied to worldwide assets.
Succession Issues
Essentially the new EU law favours Roman law of succession to blood relatives. Cyprus Estates pass to potential beneficiaries 4th removed. A Cyprus Will ensures your wife and children will benefit – but many questions arise and need to be reviewed.
A codicil can choose your home country, say English law, to settle the Will. Then you make yourself liable to 40% UK inheritance tax there.
A review of your Wills needs to consider the balance of family blood relations, marriages, step children, siblings along with your Inheritance Tax liability.
Tax Saving Tip - Cyprus Property
The cost of probate is expensive in Cyprus. Gifting can save transfer taxes and inheritance tax in the UK. Properties gifted to family can avoid Probate and save inheritance tax. Even if you are UK domiciled you can save 40% Inheritance Tax Saving.
Tax Saving Tip – UK Property Investment
If an Expat wants to be non-dom and own UK property while avoiding UK Inheritance Tax, it is possible. The UK property is owned by a foreign company held in trust and is then subject to UK inheritance tax. This situation is retained even if the non-dom owner relocates and becomes domiciled in the UK at a later date.
Free Review – Property Inheritance Tax
ProACT offer a Free Review of your Wills, title deeds, property assets and identify inheritance tax savings. Whether a Cyprus tax resident or not we can ensure your family is protected and makes tax saving on death
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?
CONTACT US to book a Free review.
Read more on our website www.proactpartnership.com/blog
Sam Orgill REGISTER FOR UPDATES
Tel +357 26 819 424 CONTACT US
