CyprusLiving

by **Peter Fishwick** » 05 Mar 2015 21:40

This will be my first year receiving my Old Age Pension. I realise that no tax is payable on this pension, but my question is, do I have to declare this income on my next tax return, and how will I avoid paying tax on it if it has to be declared?

**Sponsor**

by **keving** » 05 Mar 2015 21:52

Peter, I assume that you have told the UK authorities that you are resident in Cyprus in which case your UK pension will be paid to you without deduction of UK tax, ie gross.

You should declare your UK state pension along with all your other income. If the total of all your income, including the UK state pension, is less than 19,500 euro, then you have no tax to pay. The UK state pension is taxable in Cyprus if it takes your total income over 19,500 euro.

by **Peter Fishwick** » 06 Mar 2015 18:25

Many thanks for your prompt reply.

by **DBM** » 04 Apr 2015 21:36

keving wrote:Peter, I assume that you have told the UK authorities that you are resident in Cyprus in which case your UK pension will be paid to you without deduction of UK tax, ie gross. .

You need to complete this form: https://www.gov.uk/government/publications/double-taxation-treaty-relief-form-dt-individual, take it to your local CY Tax office, pay the fee - €80 (actually it is a MOF stamp which is attached to the form) and the CY Tax Office will then send it off to the UK.

by **sensiblebob** » 21 May 2015 17:23

If someone lives permanently in Cyprus but has a very small income (well under both UK and Cyprus taxable limits) is it compulsory to register for tax purposes in Cyprus?

by **Mike Strand** » 22 May 2015 13:41

sensiblebob wrote:If someone lives permanently in Cyprus but has a very small income (well under both UK and Cyprus taxable limits) is it compulsory to register for tax purposes in Cyprus?

Please quote your source. Thanks.

by **trevnhil** » 22 May 2015 14:37

sensiblebob wrote:If someone lives permanently in Cyprus but has a very small income (well under both UK and Cyprus taxable limits) is it compulsory to register for tax purposes in Cyprus?

Mike it is a Question, not a statement.

Trev..

by **emgee** » 22 May 2015 15:49

If you spend 183 or more days in Cyprus then you are required to register to pay Cypriot Income Tax.

Alan

by **DBM** » 22 May 2015 17:46

senssiblebob,

If your worldwide income is less than the point at which you start paying CY tax - €19,500 - the Cypriots would prefer you not to complete a tax return since that takes up their time and produces no income for them.

If you are not currently paying tax in the UK because your worldwide income is less that the UK personal allowance then I would not worry about anything and enjoy the weather here - plenty else to worry about: barking dogs, noisy UK holidaymakers, drunks etc etc...

MInd you, if you have interest or dividend income then you will be liable for the Special Defence Contribution Tax - only a small amount though.

by **trevnhil** » 22 May 2015 18:34

emgee wrote:If you spend 183 or more days in Cyprus then you are required to register to pay Cypriot Income Tax.

Alan

Alan you have said previously that you did NOT send returns in.

Trev..

by **sensiblebob** » 25 May 2015 14:45

Thanks for taking time to reply but this explains my reason for asking as we repeatedly get contradictory advice.
Can Emgee please give more comments on his "you are required to register"...says whom? as The Derynea tax office did suggest not to bother and leave everything as UK taxed but then of course where does this leave the person with interest/dividends which are taxed in UK but as a "Not Ordinarily Resident" of more than 91 days they should get interest gross? The comment from DBM seems more appropriate but can anyone say if NOT registering is a legal choice?

by **MarkN** » 10 Jun 2015 12:13

According to the Inland Revenue Department (http://www.mof.gov.cy/mof/ird/ird.nsf/dmlfaq_en/dmlfaq_en?OpenDocument):

Individual and companies resident in Cyprus are liable to income tax in accordance with the Income Tax Law ( Law No. 118(I) of 2002 , as amended) in respect of their worldwide income. An individual is resident in Cyprus, if he/she resides therein for a period or more which in aggregate exceed 183 days. A company is resident in Cyprus, if its management and control are excersised in Cyprus. Non- tax residents are liable to tax in respect of Cyprus source income only. However, non-tax residents having a permanent establishment in Cyprus may elect, if it is to their benefit, to be taxed in accordance with the provisions applicable to tax residents. The income liable to income tax includes, inter alia, trade income, income from salaried services, pensions, interest, dividends, royalties, any amounts of trade goodwil, etc. The Law stipulates for various exemptions, provided certain conditions are satisfied.Click here to return to the top of the page

HOWEVER, PSC Cyprus (the 'point of single contact') set up by the government states on their website (http://www.businessincyprus.gov.cy/mcit/psc/psc.nsf/0/749FC411823BDD31C225785600375018?OpenDocument):

Taxpayers’ Registration

Natural persons are liable to register with the Inland Revenue Department and obtain a Tax Identification Number for individuals, provided that their gross annual earnings exceed 19500 euros, whereas all companies established in the Republic of Cyprus are liable to register with the Inland Revenue Department and obtain a Tax Identification Number for legal persons.

Individuals resident in the Republic of Cyprus for tax purposes, that is, individuals residing in the Republic of Cyprus for a period or more which in aggregate exceed 183 days in the same tax year, are liable to tax in respect of worldwide income. Likewise, companies resident in Republic of Cyprus for tax purposes, that is, companies whose management and control are exercised in the Republic of Cyprus, are liable to tax in respect of worldwide income.

Individuals and legal persons not resident in the Republic of Cyprus for tax purposes are liable to tax only in respect of Cyprus source income but they may wish to be taxed as if they were so resident, provided that they have a permanent establishment in the Republic of Cyprus.

Hide details for Registration ProcedureRegistration Procedure

The IRD 163 form for the registration of new taxpayers or amendment of taxpayer’s data (individuals) or the IRD 162 form for the registration of new taxpayers or amendment of taxpayer’s data (non individuals) can be submitted, by natural or legal persons respectively, either electronically through the PSC Cyprus Portal:

individuals;
non individuals.

or by post/hand to the PSC Cyprus office or to the District Income Tax Offices. The contact details are provided in related documents.

The application should be accompanied by the following documents:

Copy of identity card or passport or alien registration certificate or evidence of T.I.C. of foreign tax authority (in case of self-employed person);
Copy of certificate of incorporation, copy of certificate of registered office address, copy of certificate of directors and secretary, copy of certificate of shareholders and copy of memorandum & articles of association or certificate of tax identification code of member state of establishment (in case of a legal person);
Copy of Certificate of Partners, Copy of Place of Business Address, Copy of Certificate of Partnership Registration, copy of partnership agreement (in case of partnership).

The Tax Identification Number is given within one or two days.

Note the

provided that their gross annual earnings exceed 19500 euros

My understanding has always been that we are obliged to register for tax if we are resident for 183 days or more (as stated to me on more than one occasion by tax officials). This from the PSC seems to contradict...

All the best,

by **sensiblebob** » 10 Jun 2015 15:01

Thanks Mark. Yes very contradictory. Think we will quote the 19500 bit and take the view that several have expressed why pay to change to something that has no benefit.Will really push my luck by asking the Deryneia office to confirm that choice is ok!

by **MarkN** » 10 Jun 2015 15:09

Another consideration raised by a colleague is that in the event of death in Cyprus, your executors will be asked for Cyprus tax clearance before the estate here will be released. If you do not have a Cyprus TIC (Tax Identification Code) this can be a very difficult process as they may be required to go back several years to prove that any potential tax liability in Cyprus has been paid...

Perhaps it is better to register, even if you don't have to pay. The return form is very easy once you have done one.

All the best,

by **Ageing Rocker** » 10 Jun 2015 15:14

I have been going to a well known Paphos based lady accountant for my tax affairs since 2004 and she made it very clear to me that I must register for tax in Cyprus but as my wife is below the level requiring her to pay tax she does not have to register. My wife therefore still receives her tax coding details from the UK and has never registered for tax in Cyprus (although she is now registered as a payer of IPT as we have our TDs).

by **sensiblebob** » 10 Jun 2015 15:43

That's very helpful news. Without intruding into private affairs does she manage to get UK interest paid gross? This little part of the equation did seem to pose a problem tour UK bank as I ma coded NT in Uk but my wife of course gets a normal notice of coding.I do hope this info helps others as potentially a number of expats who "do nothing" could find they havemade a really good choice by not registering here.

by **Ageing Rocker** » 10 Jun 2015 17:04

She (my wife) doesn't have any UK interest to get paid gross. Whether the accountant can achieve that I do not know.

by **galexinda** » 11 Jun 2015 14:01

In theory if you are resident in Cyprus and have any source of income from outside Cyprus you should be in the Cyprus tax system even if the total is under the personal allowance of €19,500 per annum. Any tax paid would be liable to Defence Levy tax in Cyprus.

Sorry I did mean 'Any interest paid would be liable to Defence Levy tax in Cyprus'.

by **sensiblebob** » 11 Jun 2015 15:42

galexinda wrote:In theory if you are resident in Cyprus and have any source of income from outside Cyprus you should be in the Cyprus tax system even if the total is under the personal allowance of €19,500 per annum. Any tax paid would be liable to Defence Levy tax in Cyprus.

You have just totally contradicted the previous reasoning with references given so what do you base that comment on. I assume the last bit should read "ANY interest" which is the reasoning behind NOT joining the Cyprus Tax system as basic tax deducted in UK is lower than defence tax here.

I have belonged to two forums about Cyprus for over 10 years and comments like this which appear to be an "opinion" have misled many people new to Cyprus or thinking of moving here.If you can PROOVE your comment I stand corrected and will be pleased to comply with any legal requirement but prefer to read and take guidance from justified and reasoned guidance.

Surely this type of matter is where moderators of forums need to join in and advise/correct misleading comments. btw this is not intended as the start of one of those longwinded opinionated arguments that so often spoil the help sometimes available on such forums.

by **Ageing Rocker** » 11 Jun 2015 18:02

It totally contradicted what my highly qualified accountant told me. I wonder how 'highly qualified' this poster is?

by **galexinda** » 11 Jun 2015 19:20

Sorry I did mean interest and not tax in the last sentence of my previous post.

Please just ignore this information as the above posters state it was obviously incorrect advice from the accountant who was looking into my tax status a couple of years ago when I was enquiring about investing a sum of money which would pay interest at regular intervals.

by **sensiblebob** » 11 Jun 2015 22:04

Thanks galexinda, which was the reason I queried your post as similar misleading comments have caused problems before on things like registration of residency,IPT(Not that anyone is an expert!) and even driving licence queries. There are plenty of self appointed experts on these forums so people do be wary.

by **Sinbad** » 11 Jun 2015 22:50

Standard forum type stuff , you just take any advice given and make the best of it you can .

"I read it on a forum " just doesn't cut it in a court of law .

For my part , I went to the Paphos tax office , mine and the wife's pensions are low , but the lady put us in the Cyprus tax system and said no tax would be payable . And each year the tax form comes and we just enter our income .

by **micktreviss** » 12 Jun 2015 18:08

Ageing Rocker wrote:My wife therefore still receives her tax coding details from the UK and has never registered for tax in Cyprus (although she is now registered as a payer of IPT as we have our TDs).

Interestingly, when we sought to get our Title Deeds split i.e. I gifted 50% to my wife, the Limassol Tax Office would not complete the paperwork unless my wife was on the tax system.

Actually, she was on the tax system and has a TIC No as she is in employment here full time BUT she has not sought an NT Certificate from HMRC in Nottingham and as she earns less than €19500, does not pay tax here or get sent any tax related paperwork to complete; she does not complete an annual tax return.

It seems as if they tidy things up here by allocating a TIC as she pays Social Insurance (SI) contributions, but they have never 'activatated' her into the system fully.

It may well be that she will get sent a return to fill in now but got to say that going to an office to get a TIC and being given a printout stating the TIC which she already had (or knew) was quite comical and fully in accord with the majority of procedures I have come across here!

Mick

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