Tax Strategies for your Cyprus Property

 

Now that the HMRC in the UK is closing in on those people who rent out their properties in Cyprus the time has come to decide on how you want to pay tax on the income. And how much !!

1. Pay personal tax in Cyprus and Pay personal tax in the UK under a Double Taxation Treaty

OR

2. Or may be transfer property to Cyprus Registered company under an exempt CGT status and only pay 10% Corporation Tax in Cyprus.

See BDO Philippides Chartered Accountants – Link below;

www.bdo.com.cy/downloads/Tax%20aspects%20of%20relocating%20to%20Cyprus%2029%20May%202006%20BDO.doc

There is a 20% tax on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies that own such  immovable property situated in Cyprus, but excluding shares listed on any recognized stock exchange.

The following are exempt from Capital Gains Tax:

a) Transfers arising on death

b)  Gifts made from parent to child or between husband and wife or between relatives up to the third degree

c) Gifts to a limited liability company where the company’s shareholders are members of the donor’s family and the
shareholders continue to be members of the donor’s family for five years after the day of the transfer

d) Gifts by a limited liability company, whose shareholders belong to the same family, to its shareholders, provided such property was originally acquired by the company by way of donation. The property must be kept by the donee for at least three years.

e) Gifts to charities and the Government

f) Transfers as a result of reorganisations

g) Exchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws

h) Expropriations

i) Exchange of properties, provided that the whole of the gain made on the exchange has been used to acquire the other property. The gain that is not taxable is deducted from the cost of the new property, ie the payment of tax is deferred until the disposal of the new property.

Selling your Cypriot home, constituting your main house, there is a one off tax exemption for the first £50.000 of capital gains realised. For others, non resident in Cyprus, there is a one off, £10,000, personal CGT Allowance per person.

On the other hand please note that BDO Philippides say that “Exchange of properties, provided that the whole of the gain made on the exchange has been used to acquire the other property. The gain that is not taxable is deducted from the cost of the new property, ie the payment of tax is deferred until the disposal of the new property.”

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