Kibkom North Cyprus Forum

Cyprus Double Taxation

A bombshell was delivered to those ex-pats living in Cyprus earlier this year, in the shape of the new double-taxation treaty between UK and Cyprus, which comes into effect in Jan 2019. This will turn existing arrangements on their head; UK government pensions will henceforth be taxed at source in the UK, rather than in Cyprus. This will result in a significant increase in tax for most expats living on the Island. The government argues that this is simply bringing the agreement in line with most other double taxation agreements. This is sort of true, but such agreements do vary and must be tailored to circumstances in each case. Here, a very significant British community, settled by virtue of their previous service in Cyprus has had its long-term plans unexpectedly rendered obsolete at a stroke. The Society's Chief Executive recently attended a debate in the House of Commons to consider the "International Tax Enforcement Order (Cyprus) 2018". At the debate two MPs - Bob Stewart and Mark François - spoke powerfully in support of those who might be affected. At the end of the debate the order was passed, but the Minister undertook to meet the MPs about the implications of the change. The Society continues to engage on this issue, although the runes do not look good.

Is this ‘old hat’, if not will it affect us in the North?

My reading of it was that excluding the old age pension, any government pension i.e. civil service or armed forces, will from 2021 be taxed in UK at what ever rate the individual is paying, instead of being taxed in ROC at 5%. So should effect very few I would imagine.

Quick answer is that it will not effect us in the North as anyone in receipt of a Government Pension and living in the North is already having their pensions taxed at source. It is yet another fallout from the Brexit master plan as UK will no longer be in the EU but Cyprus will remain so why give an EU country extra money when the UK Government can spend it on other things in the UK. However, what would effect us in the North is if we became officially part of Turkey. Then this would come into force:
https://assets.publishing.service.gov.u ... _force.pdf

What those in the South on Government Pensions now face is a 15% rise in income tax - that will sting a little!

Agree with waddo. those of us whose pensions both state and private, are taxed in country of original, we won't notice the difference at all. Just as an aside, we met some expats living in Antalya last year, they oay 4% tax out there and NOTHING at all on Old Age Pensions. They have opted out of the UK tax system altogether. (at least this is what they told us, seemed a bit too good to be true though)!!!