Automatic Inheritance Tax on Property, Business and Probate for Expats
8 Reason to Use Wills and Trusts to Protect Overseas Assets
ProACT Sam Orgill www.proactpartnership.com .
Automatic Exchange of Information Impacts Everything
Time to review your Will: EU law is not the same as UK, and Automatic Exchange of information makes sure offshore property, investment and business is reported between your home country and country of residence.
The EU introduced new laws for dealing with Estates. Cyprus like other EU countries introduced wide ranging changes in legislation that has a direct impact on the tax status of assets held by Expats overseas.
As well as asserting the local state rules on inheritance, including forced heirship to blood relatives (married or children, not partners and stepchildren), it also opened up the requirement for a probate administration in an EU country to require a tax clearance certificate from an Expats’ home country.
This allows the possibility for the home country to find out about the overseas business, property and investment assets. This could add a 40% inheritance tax bill to an estate.
In 2017 the bar is raised further, as automatic exchange of information means any financial transaction, including property purchase or sales, probate administration or tax return is reported to the home country.
Now every Expat must review their use of Wills and Trust to protect overseas property, business and investments in line with the new legislation and automatic exchange of information rules.
EU directive 650 adopted into law by EU states, including Cyprus law, includes a provision and grants the right for all EU citizens to choose for their Will to be settled under the law of their nationality and Domicile at the time of death. Clearly this choice must be made before death (Make a Will with ProACT). This is done by amending a Will to include the necessary provisions for the estate to be covered by English Law or the Law of your home country. On death, home country rules can be used to obtain Probate administration in Cyprus. However there must be clear directions included within the Will documents. There are no excuses for not making this provision.
Domicile and Inheritance
This legal change brings a legal definition of domicile. It also requires you to confirm your country of domicile at date of death. By declaring you want your Will settled under the law of your home country, you are in practice claiming a domicile of origin. This could cost you a 40% inheritance tax bill if details of the tax status of the estate is exchanged between your home country and tax residency where overseas property, business and investment are held.
Cyprus now has a 0% inheritance tax rate and a statutory definition of Domicile and non-Dom that affects inheritance tax liability. Everyone generally acquires the Domicile of their country of birth, their origin. If you are a Cyprus tax resident for more than 17 out of 20 years you acquire a Cyprus Domicile. In which case, you have 0% inheritance tax on your estate at death.
If you elect for Settlement of your Will under the laws of your home country, domicile of origin, you will become liable to that countries Inheritance tax, in the UK that means 40% inheritance tax on worldwide assets.
Domicile Inheritance Tax Savings
As a non-dom with Cyprus tax residence there is more tax savings. 0% Tax on Savings and Dividends for Expats.
Time to review your Will, EU law is not the same as UK, and Automatic Exchange of information makes sure offshore property, investment and business is reported between your home country and country of residence
8 Reason to Use Wills and Trusts to Protect Overseas Assets:
- Review & Make a Will – ensure the people you want benefit & avoid forced heirship.
- Do you need a Second Will for different jurisdictions?
- Use a Tax Free Trust to Protect Overseas Property Assets
- Review Your Domicile to save Inheritance Tax & Protect Beneficiaries
- Review you Inheritance Tax Savings to Save 40% on Death
- Consider Gifts to Avoid Forced Heirship & Inheritance Tax
- Review your Investment and Savings for Tax Efficiency
- Avoid Automatic Exchange of inheritance tax information on your death
Look Forward – Plan Ahead
ProACT expat experts offer tax saving for people living and working and investing abroad. We offer a Will and Trust Review for any tax saving issue – property, business, pension, investment.
ProACT can also assist and offer Review and Make a Will, provide updates or revisions as required follow the changes to automatic exchange of information and its impact on probate, estates and inheritance tax.
ProACT Tax Saving Expat Experts for UK & Cyprus. Find out more at our website.
Find out more at our website www.proactpartnership.com
ProACT Partnership Expat Experts offer tax, property, investment and business advice for people living and working and investing abroad. Find out more at our website. We value your feedback, please comment and share on our articles on our website www.proactpartnership.com/blog
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