It’s no secret that Cyprus is well known for its lavish beaches and 8 months a year summers. Located in the Mediterranean Sea offering easy access to Europe, Asia and Africa, the island boasts some of the most crystal clear waters and blue flag beaches around. In fact, a recent study conducted in June 2020 has found that 99.1% of Cypriot bathing waters were of excellent quality.
But what else except from blissful summer days can Cyprus offer to UK nationals looking to relocate?

Brexit

The United Kingdom’s withdrawal from the European Union, as of 31st December 2020, is now a fact and as we enter into 2021 it’s looking a lot clearer how trade and relations will be formed between the EU and UK. After a very lengthy negotiation period on what the terms should be for the UK’s exit from the EU, the EU-UK Trade and Cooperation Agreement has been ratified in order to govern the regulations between the UK and the European Union.

What this means for UK nationals living in or relocating to Cyprus

It is important to emphasize that whereas the UK has withdrawn from the EU, there has been a Withdrawal Agreement put into effect to protect the rights of UK nationals and their families living in EU member states. In essence, very little will change for UK nationals already residing in EU member states.

Specifically, if a UK national has been residing in Cyprus prior to the 1st of January 2021 the right to reside will not change provided the individual falls within one of the listed categories:

• A person either working or self-employed;
• A student who can show enough funds to support living during studies;
• A person who can show enough funds to support themselves without employment;
• A person who already has permanent residency.

Further to these criteria, UK nationals will not need to reapply for new residence documents in order to stay in Cyprus or to receive any residency documents in the future, their current documents of residency will be valid after the 31st of December 2020.

Individuals living in Cyprus for less than 5 years will be able to keep their residency rights provided they fall under one of the above categories allowing for exceptions such as if an individual goes through a short period of unemployment they can still be deemed a ‘worker.’ Each individual will have to reside in Cyprus for 6 months out of 12 in order to keep their right of residency.

Once the 5 year period is over, permanent residency will be granted where the conditions above will no longer have to be met in order to keep the residency. It can only be lost if the individual resides outside of the EU member state for 5 consecutive years.

Rights under the Withdrawal Agreement, include having the right to be treated equally with nationals of the country where the UK national lives and cannot be discriminated against. They will have broadly the same entitlements to work, study and access benefits and services as before Brexit. Cyprus appreciates the long standing relationship and the contribution the UK has made to the economy, therefore, will protect all rights of its residents as per the Withdrawal Agreement.

UK nationals can travel to Cyprus freely and will not require a residency permit if their stay does not exceed 3 months.

Taxation

As a member of the EU, Cyprus offers all the free trade and free movement benefits of the European Economic Zone. Corporate tax is amongst the lowest in the EU at 12.5% which is very lucrative as an incentive for businesses looking for relocation to a European member state whilst maintaining lower costs. Income tax is 0% on any amount earned of up to 19 500 euros annually and starting at 20% for amounts above that, with the maximum being 35% for the highest earnings.

Cyprus has a double taxation agreement with the UK which is still in place and is not affected by Brexit. It eliminates the risk of any income being taxed twice. If income tax is applied in one country then it will not be applied in the other one as well.

The determining criteria is the presence in the country for natural persons as to whether taxation needs to be applied in Cyprus on income i.e. an aggregate 183 days of the tax year have to be spent present in Cyprus to be considered a tax resident or the 60 day rule will apply if the individual:

• Is not a tax resident of another state;
• Does not stay for more than 183 days in another state;
• Stays in Cyprus for at least 60 days;
• Exercises any business in Cyprus or render salaried services in Cyprus;
• Has a permanent residence in Cyprus which you own or render.

If it is determined that an individual is a resident of Cyprus for tax purposes, then any income accumulated in or outside Cyprus will be subject to taxation on the island.

When it comes to legal entities such as limited liability companies, the determining factor of the tax residency will be the actual place of management of the company. The ways in which this is assessed includes but is not limited to the residency of the majority of directors who manage the company and the location of the board meetings taking place.

Pension and Benefits

UK state pension can carry on being paid abroad as per the Withdrawal Agreement, or if an individual is permanently moving abroad from the UK the pension can be paid abroad provided the relevant authorities are notified. All the rates of increase and social contribution will be applied as normal without any changes.

In order to claim benefits there are certain rules and regulations regarding which country they should be claimed from. As long as the individual is eligible to receive the following benefits can also be paid to an EU country:

• Bereavement Support Payment and other bereavement benefits;
• Industrial injuries benefits;
• Maternity Allowance;
• Statutory Maternity Pay;
• Statutory Paternity Pay;
• Statutory Sick Pay.

Brexit is now a reality and as a result for the foreseeable future many UK nationals will look for relocation. Whether, the purpose is driven by business or personal motives, Cyprus can offer many benefits to its residents, from high level quality of life to the incentives provided as an EU business hub with a geostrategic location, the reasons for choosing Cyprus can be numerous.

Whatever the case may be, at AGP Law Firm we are always available to assist comprehensively in all matters regarding residency in Cyprus. Should you have any questions please contact us.

Related article: Tax benefits for foreign nationals | Cyprus

The information provided by AGP Law Firm is for general informational purposes only and should not be construed as professional or formal legal advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice.