Paphos People

Is Residency possible without getting into the tax system?

I am looking at the possibility of moving to Cyprus - not definite - just checking out for the moment. I am a British citizen but have not lived in Britain for donkeys years. I am UK Non-Resident in the eyes of HMRC. I am early-retired but will not get UK state pension for some years (if ever, if they keep messing about with the change of retirement age). I have no income from UK whatsoever. I may do QROPs pension at some point in the future, though this will be quite a small amount of income.

The income that I live off of (investments) are in Asia and are zero tax, so I don't pay any tax on my income currently.

So, is it possible? Or would I be mad to even be thinking about this?

Answers in the same order as your questions posed;
No.
Yes.

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I'll be back!

Interesting question, actually residency is only a requirement if you intend to stay more than 3 months in Cyprus, tax is different and I am sure that there are a lot of ex pats who are are living in Cyprus and still pay their tax in the UK, to qualify for the duel taxation agreement you must live outside of the UK for more than 6 months of the year and are not allowed to visit the UK for more than 93 days....I may be wrong on those figures...But I am fairly sure residency does not necessarily mean you have to ay your tax in Cyprus.

Thanks Topgun....hehe.

Thanks Hudswell. I will have to do a bit of searching on this. If anyone else has any comments, I'd be interested to hear.

I know of a German couple who seem to spend half the year in Cyprus and half the year in Asia. I'll have to track them down and see what they do, how they manage that. Though, this living in two places sounds nice in theory, but as we get older, do we want to be jet setting around the world? For me, I think I'd like to be in one place and settled.

There are many people who have residency and are not in the Cyprus tax system. It is perfectly legit as the assumption is they are remaining in the tax system of their home country. In your situation I would get my residency (assuming you will be staying in Cyprus for more than 6 months per year) and leave your tax afairs as they are. You won't get any questions from the Cyprus tax man.

I am not a financial advisor, but that is what I know.

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Only two things are infinite, the universe and human stupidity, and I'm not sure about the former. - Albert Einstein

I moved to Cyprus in 2004 and am resident here. However, when I was working my income was always less than the annual personal allowance and since I stopped working I have no income and therefore have not registered for tax here. The HMRC are aware that I have been living here since 2004.

Likewise my husband was also below the income threshold (currently €19,500 per annum) but when he became eligible for the UK State Pension he registered with the Cyprus Tax Office and now completes a tax return every year because it is treated as worldwide taxable income. Not sure if he had a choice in the matter, but if he had remained in the UK system he would have paid some income tax, whereas in Cyprus it is tax free.

For those on a UK pension, why would you not want to be tax resident in Cyprus (5% tax above higher basic limit) when UK pension taxed at 20% - rhetorical no-brainer really!

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I'll be back!

I have always been under the impression that if you spend more than 183 days in Cyprus you legally have to register with the Income Tax. Unless of course the rules have been changed!!!!!
Blossom

The Cyprus Tax legislation has changed recently, so now EVERY resident is expected to complete a tax return irrespective of income level.

Also, don't forget the Defence Tax - this is currently 30% on worldwide income, although if you are a low earner, it's reduced to 3% but if your interest is earned in Cyprus, the Defence Tax is deducted at source at full rate and you have to claim back the difference. Just don't hold your breath while you wait for a refund

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Kay

Those who do not like cats, must have been mice in a previous life.

I suspect this might kill the idea. I am not a rich person but there's a very big difference to paying 30 percent of your income, and zero percent of your income. That's definitely a no-brainer.

Thanks all for your replies. I may have to get my thinking cap on.

I have a friend who will be anonymous on here.

He has got all the residency papers, pays local taxes and water bills. Has an account for electricity.
I asked him how much tax he pays. He said nothing.

He explained that the Cypriots know he lives here as he pays Council type taxes.
When the Cypriot Tax office ask him for money he'll pay what is owed.
He sees no advantage in doing their job for them and telling them he is here, when, if the Authorities were joined up they already know.
He has lived in Cyprus for over 5 years now.

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Age improves with good wine