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Would you like to live in Cyprus as an expat, from the UK?

In this article, we will explain the ins and outs of the Cyprus-UK double tax treaty and the tax incentives that you can take advantage of.

Whether you’re a business owner, an employee, or a retiree, understanding this agreement can greatly benefit your financial situation. So, let’s dive into the details of this important tax agreement.

How the treaty affects individuals moving from the UK to Cyprus

If you are an expat considering a move from the UK to Cyprus, understanding the double tax treaty between these two countries is crucial.

The treaty ensures that you will not be taxed twice on the same income, eliminating the potential for double taxation. This means that any income you earn in Cyprus will only be subject to taxation in Cyprus. And any income you earn in the UK will only be subject to taxation in the UK. This can significantly help your financial situation and make the transition smoother when relocating.

 

What income is subject to taxation in each country

In Cyprus, you will be subject to taxation on your worldwide income, including salary, rental income, dividends, and capital gains. However, the tax rates in Cyprus are often more favourable than in the UK. Making it an attractive destination for individuals looking to optimise their tax situation.

If you continue to earn income in the UK while living in Cyprus, you will still be subject to taxation in the UK on that income. However, the treaty ensures that you will not be taxed twice on the same income, so any income earned in the UK will only be taxed in the UK, not in Cyprus.

In Cyprus, the personal income tax rates range up to 35%, depending on the amount of income earned. Additionally, there is a 12.5% corporate tax rate for companies operating in Cyprus. Expats can take advantage of these tax rates and explore opportunities to become tax efficient by leveraging deductions and exemptions available under the treaty.

Understanding what income is subject to taxation in each country is crucial for individuals moving from the UK to Cyprus. So, take the time to optimise your tax situation under the Cyprus-UK double tax treaty.

 

Tax relief and exemptions available under the treaty

Under the Cyprus-UK double tax treaty, individuals can benefit from various tax relief and exemptions. For example, if you are a resident of one country and earn income in the other, you may be able to claim a foreign tax credit to avoid being taxed twice on the same income.

Additionally, certain types of income, such as dividends and capital gains, may be subject to reduced tax rates or even exempt from taxation altogether. It’s important to understand these provisions and take advantage of them to optimise your tax situation.

For businesses, the treaty means you only have to pay a 12.5% corporate tax rate! If you’re curious about this setup, our team are available to assist you.

 

Benefits for businesses operating in both countries

For businesses operating in both Cyprus and the UK, the double tax treaty brings numerous benefits. Firstly, it eliminates the risk of double taxation, ensuring that businesses are only taxed on their income in the country where it is generated. This helps to reduce financial burdens and increase profitability. Additionally, the treaty provides a more favourable tax environment for cross-border trade, encouraging investment and promoting economic growth.

Businesses can also take advantage of provisions that reduce withholding taxes on dividends, interest, and royalties, making it easier to conduct business between the two countries. Overall, the double tax treaty offers significant advantages for businesses operating in both Cyprus and the UK, creating a more favourable business climate.

 

How RHJ Accountants can help

If you find yourself overwhelmed by the complexities of the Cyprus-UK double tax treaty, don’t worry – RHJ Accountants are here to help.

Our team of experienced professionals specialise in international taxation; providing expert guidance. You may think that 12.5% corporation tax is low, too low to believe it, but we’d never offer a service if it wasn’t legitimate!

Whether you require personal or corporate tax advice, between the UK and Cyprus, our team are happy to help. Schedule your first free initial consultation with our team, to get started!

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💬 PSA: between April & June our Portuguese team have limited meeting availability due to the Tax Return Submission Period 🇵🇹