10 Things To Do for Expats to Protect Overseas Property Investment

10 Things To Do for Expats to Protect Overseas Property Investment

Domicile Changes Wills, Property, Savings & Inheritance Tax for Expats in Cyprus

Sam Orgill www.proactpartnership.com  asks what do you want from the changes to Domicile from a Cyprus perspective. Change of Domicile Impacts Everything

Cyprus has introduced wide ranging changes in legislation that has a direct impact on the tax status of assets held by expats in Cyprus. 

Fuelled by upcoming changes to Exchange of information in 2017, Overseas Property Investors and Expats Living and Working Abroad should review everything to protect their overseas assets and family.

Now every Expat must review their Wills, Inheritance Tax, Savings Taxes and Property Title Deeds: to bring their needs in line with the new legislation. 

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Cyprus Law of Succession

This law has been amended to adopt and comply with EU Directive 650, a new common EU standard.  The directive requires each member state has a law of settlement of estate applicable to the habitual residence at the time of death. The previous option for Expats to make a Will and choose who should benefit from an estate has been removed.  Now Cyprus laws of succession apply to all residents’ Cyprus Wills and Estates.  There are compulsory and discretionary portions, but basically the widow and children share an estate. If there are no children then the widow could share with brothers, sisters, uncles, nephews of the deceased, who may be able to claim a share of the assets.  The British tradition of the spouse inheriting the whole estate is not available under Cyprus laws of succession.

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EU Law

EU directive 650 adopted into Cyprus law does have 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. 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 their nationality. On death a certificate can then be obtained to this effect for use in Cyprus.  However there must be clear directions included within the Will documents.  There are no excuses for not making this provision.

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Domicile and Inheritance

This change by Cyprus creating a statutory definition of Domicile and non-Dom 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 now acquire a Cyprus Domicile.  In which case, you have 0% inheritance tax in Cyprus, but could have forced settlement of an estate under the laws of succession in Cyprus.

If you elect for Settlement of your Will under the laws of your domicile of origin you will become liable to that countries Inheritance tax, in the UK that means 40% inheritance tax on worldwide assets.

There were UK Inheritance tax changes in July 2015 also, see our linked articles.

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Domicile and Savings Tax

As a non-dom but Cyprus tax residence there is good news. From July 2015 you have no liability to Defence Levy savings Tax on Bank interest (30%), dividends (17%) or property rentals (3%) earned outside Cyprus.  This is a big tax saving for expats who choose Cyprus as a tax residence while holding investment, business and property outside Cyprus.

You can have a non-dom status in Cyprus for 17-20 years before affecting your domicile of origin.  Leaving plenty of time to move on, or, back home if inheritance is a concern.

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Property Tax Changes

The EU Troika also achieved one of its other main targets – for everyone to receive title deeds at point of sale.

New legislation now means that with a contract of sale the land registry is able to issue title deeds without the delay of banks or developers.  The EU have backed a subsidy to reduce the transfer tax by 50% for transfers completed by the end of 2016.

This will leave developers with IMPT and communal charges, and banks with loans to sort these out in their own time.  The title deed holder will have the control and power to negotiate and sell freely his asset in Cyprus.  The bailout out money will stop the collapse of banks and developers as this financial situation unfolds.

 10 Things To Do for Expats to Protect Overseas Property Investment

Tax Saving Tips for Expats This Month:
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  1. Review your Will – amend to ensure the people you want benefit as you wish.
  2. Do you Need a Second Will for different jurisdiction
  3. Make a Will / Adjustment for Cyprus to avoid forced heirship
  4. How will Domicile Effect your Inheritance Tax & Beneficiaries?
  5. Review you Inheritance Tax Saving to save 40% on Death
  6. Consider Gifts to Avoid Forced Heirship & Inheritance Tax
  7. Review your Investment and Savings for Tax Efficiency
  8. Review your Cyprus Tax Returns for 30% Defence Levy Cyprus Tax Savings
  9. Look out for Property Investment Savings in new Cyprus Property Auctions
  10. Consider Cyprus Property Investment for 50% Transfer Tax Savings

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Look Forward – Plan Ahead

ProACT expat experts offer tax saving for people living and working and investing abroad.  We offer a Free Review for any tax saving issue – property, business, pension, investment.

ProACT can also assist and offer Free Review and Make a Will, provide updates or revisions as required follow the changes to inheritance tax, domicile, Savings Tax and Property Title Deeds.

ProACT Tax Saving Expat Experts for UK & Cyprus. Find out more at our website.

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Sam Orgill - ProACT Partnership - Tax Saving Experts


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