Tax for Expats
Everything you need to know about tax living & working abroad.
Tax is an important consideration for expats. Some expats cite lower taxes as a big factor in their decision to live or work abroad.
However, taxation abroad offers all expats the opportunity to maximise their tax allowances and minimise their taxes. You should take advantage of all the opportunities available to you.
Becoming a tax resident abroad
Click image to read more about how tax residency is determines.
Usually you have to have spent over 183 days in another country in a tax year for you to become tax resident there although there are schemes to reduce this requirement such as Cyprus’ 60 day rule.
Once you qualify as a tax resident abroad you should register with the relevant authority. For example in the UK it is HMRC and in the USA it’s the Inland Revenue Service (IRS).
The tax authority will then issue you with a tax number which allows you take advantage of the tax allowances in the country & submit tax returns.
Benefits of becoming a tax resident abroad
Becoming a tax resident abroad allows you to take advantage of tax allowances abroad, which may be lower than your home country.
We can use the example of Cyprus vs the UK to illustrate that Cyprus has a €19,500 (£16,700 at the time of writing) tax free allowance vs the UK’s £12,570 allowing you over £4000 more income before you start paying 20% tax.
If you’re retiring abroad, Cyprus also offers a flat rate 5% tax on foreign pensions which gives pensioners an even bigger tax saving.
Furthermore you can even pay 0% capital gains tax on foreign assets in Cyprus by becoming non-domiciled.
You can read more about Cyprus tax here.
Split year treatment
By timing the date you move abroad you can use split year treatment & take advantage of 2 tax allowances in the tax year. For example if you move abroad in 2022 and you earned £20,000 you might apportion 50% of your income to the UK and 50% to France and fully utilise both countries tax free allowances, effectively paying no tax.
This is most effective when 2 countries have different tax years - read more about split year treatment.
Tax Years By Country
Tax in your country
UK Tax
Learn about the tax rates, allowances & deadlines in the UK.
Cyprus tax
Learn about the tax rates, allowances & deadlines in Cyprus.
ProACT Tax Services
ProACT offer a range of tax products including a tax saving report, annual tax return service & tax registration (included in the retained client service). You can also book a consultation if you’d like some guidance on your situation.
