Receiving a pension is only one way to receive a specific type of income with its own unique tax treatment.

Individuals can earn income from work, receive dividends from investments, receive interest from loans and savings, receive property & rental income, receive royalties and license fees from commercial arrangements. 

Individuals can also receive capital sums from the sale of property, shares, crypto, or any other assets.

All these different income and capital sources are tabulated into an annual tax return to be completed in your country tax residence.   

If you receive a pension, this does not stop you receiving other types of income including working abroad.

And expat who receives a pension but chooses to keep working abroad can do so irrespective of how much pension income they are receiving.

Indeed tax savings can be significant if your pension is taxed outside the UK, especially considering that from from April 2023 incomes in excess of £125,000 are taxed at 45% with no personal allowance (currently £12,570).

Your right to work abroad depends upon a country of your tax residence. 

Some countries allow expatriates to work without restriction while others has resections such as requirements for work permits, visa’s, limitations on which industry you can work and minimal salary requirements.

These rules change from country to country.

Restrictions narrow the options of which country you move to, with the complexity possibly informing your decision also.

You may also consider your families needs, culture, language, crime & low tax for your family and/ or business.

Here are some examples:

EU Expats

EU expats have the right to work in any of the EU country without seeking specific work visas or permits. This includes taking up employment or creating your own business through a company, or as a sole trader.

UK Expats

UK expats relocating to Cyprus to take up an employment would first need to have that job offer approved before commencing an application for resident permit. This is equivalent to the UK version of having an invitation from an employer to sponsor an application to work and we locate the UK.

Alternatively, expats could establish a business in Cyprus either as a sole trader or their own company.

This could be combined with appropriate levels of investment, and then come to allow for permanent residence to be granted immediately along with benefits for their family provided that social/ national insurance is paid in the country of which the economic activity is carried out.

Expats can work remotely in the UK, receiving a pension, and be employed as a contractor for an overseas company, including a personal service company, even if this is based in the UK. 

Benefits of Cyprus

• Cyprus has a generous €19’500 tax free allowance with a basic tax rate starting at 20% above that (read more about Cyprus tax rates)

• Foreign pensions can be taxed separately from other income 5%

• Dividends are charged 0% tax for expats in Cyprus

Read more about social insurance when living or working

Where do I have to pay national insurance when relocating and working abroad?

Medical cover abroad - what could go wrong for expats?

UK State Pension for Expats: Ensuring Your Financial Security

Need help?

We offer online consultations with expat experts on any issue you may have.

For help and guidance book a consultation with ProACT today.