british tax changes

Taxation Changes for British Nationals in Cyprus

UK – Cyprus DTA Changes – The Effects on British Nationals in Cyprus

 

The British High Commission and HM Revenue and Customs (HMRC) held two briefing sessions in Limassol and Pissouri last week on forthcoming changes to UK tax legislation which may affect UK nationals living in Cyprus.

The updated UK-Cyprus Double Taxation Agreement (DTA) signed on March 22 this year in Nicosia will have major ramifications for UK nationals residing on the island.

Significantly, the new DTA will tax all government pensions at source (in the UK) and affected individuals will pay UK standard tax rates.

It should be stressed that this applies to publicly funded pensions – such as those received by former members of the British armed forces – paid by the government and not private pensions. Nor does it apply to the statutory state pension.

The DTA has not yet entered into force, but will do so once both countries have completed their parliamentary procedures and exchanged diplomatic notes, expected at the beginning of tax year 2019-2020.

According to the UK diplomatic mission, the minimum rate on pensions in the UK is 20 per cent, “with those taxpayers also eligible for the relevant tax free allowance of £11,850”.

“Those affected by these changes will be able to continue to file their tax returns as previously.” On how many UK nationals in Cyprus will be affected, the British High Commission stated: “HMRC does not produce impact assessments for secondary legislation enacting double taxation treaties. This is, in part, due to the difficulty of assessing the impact of a complex treaty that is designed to apply for at least 20 years and which affects not just individuals and businesses, but also trade and investment across borders.”

However, it added that it estimates there are around 70,000 British citizens residents in Cyprus, several thousand of whom may be ex-military personnel.

 

In need of Tax Planning in light of recent events?

Contact us at JRaphael Corporate Consulting Limited.

 

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