# Tax on Pensions..



## Shotokan101 (Mar 29, 2019)

Hi I believe that Cyprus currently offers low tax for pensioners - is this omly for those in receipt of a state pension or is it also applicable for those on personal pensions? 

Thanks

Jim


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## nhowarth (Dec 6, 2017)

Hi Jim

The lower tax rate applies to state retirement pensions, personal pensions and all other pensions.

But if you have a UK Government Service Pension, this will be taxed by HMRC unless you elect to pay tax on it in Cyprus. (this includes pensions paid to retired UK civil servants, armed forces personnel, NHS staff, teachers, local government employees, police etc.)

PwC publish a handy guide - Tax Facts & Figures.

Regards,


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## Shotokan101 (Mar 29, 2019)

Thanks Nigel that's very useful

Jim


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## GSmith (Nov 9, 2015)

There are many tax advantages to living in Cyprus. As mentioned in the Tax GFuide attached by Nigel, income from savings and dividends are currently exempt from tax for people who are classed as Non-Domiciled. You retain this status for 17 years if you move here. Obviously tax laws can change in future.


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## Shotokan101 (Mar 29, 2019)

GSmith said:


> There are many tax advantages to living in Cyprus. As mentioned in the Tax GFuide attached by Nigel, income from savings and dividends are currently exempt from tax for people who are classed as Non-Domiciled. You retain this status for 17 years if you move here. Obviously tax laws can change in future.


Thanks - does that status change if you apply for residency ?

Jim


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## GSmith (Nov 9, 2015)

Shotokan101 said:


> Thanks - does that status change if you apply for residency ?
> 
> Jim


Nope, I am permanent resident and have applied for citizenship and I'm still Non-Dom. Sadly only for 2 more years..... :-(


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## Shotokan101 (Mar 29, 2019)

GSmith said:


> Nope, I am permanent resident and have applied for citizenship and I'm still Non-Dom. Sadly only for 2 more years..... :-(


Thanks that's good to kmow

Jim


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## dp600 (May 13, 2018)

I have An RAF and a Prison Service pension Pay Tax in UK on Both,will I have pay in Cyprus as well ?.
Thank You.


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## nhowarth (Dec 6, 2017)

dp600 said:


> I have An RAF and a Prison Service pension Pay Tax in UK on Both,will I have pay in Cyprus as well ?.


No - you'll only pay tax on your RAF and a Prison Service pensions in the UK. But is may be worthwhile electing to pay tax on those pensions in Cyprus - see Pension Christmas present from HMRC.

Regards,


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## dp600 (May 13, 2018)

Thank You.


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## mikensue26 (Jan 6, 2019)

nhowarth said:


> No - you'll only pay tax on your RAF and a Prison Service pensions in the UK. But is may be worthwhile electing to pay tax on those pensions in Cyprus - see Pension Christmas present from HMRC.
> 
> Regards,


Apologies for high jacking this thread, but if one chooses to be taxed on State and private pensions in Cyprus, how does one go about it? Thanks for any responses.


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## nhowarth (Dec 6, 2017)

Hi mikensue

The first thing you need to do is register with the tax authorities in Cyprus and get the form 'DT Individual' from https://www.gov.uk/government/publications/double-taxation-treaty-relief-form-dt-individual 

Complete the Form and get a 'Revenue Stamp' from the Post Office. (I can't remember how much they cost as I last bought one in 2002.)

Take the partly completed form to the Tax Office and they will (1) issue you with a tax reference number that is needed on the Form (2) complete the form (3) return it to the HM Revenue and Customs.

You can then sit back and twiddle you thumbs for a few months (6 in my case) and with any luck you'll get a letter from HM Revenue and Customs - and, if you're really lucky, a tax rebate 

What happens exactly after that I cannot remember, but you will need to complete a Cyprus Tax Return on-line and pay any tax you owe.

The tax system here is very straightforward and it's unlikely you'll need an accountant unless your financial affairs are complex. (I used an accountant once who completed my first return and showed me the ropes - since then I've done it all myself.)

Regards

Nigel


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## mikensue26 (Jan 6, 2019)

nhowarth said:


> Hi mikensue
> 
> The first thing you need to do is register with the tax authorities in Cyprus and get the form 'DT Individual' from https://www.gov.uk/government/publications/double-taxation-treaty-relief-form-dt-individual
> 
> ...


Thank you for the most detailed answer, I'm sure it will be useful. Am I correct in saying tax forms are completed in July for the current year starting Jan 1st to Dec 31st.


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## GSmith (Nov 9, 2015)

nhowarth said:


> No - you'll only pay tax on your RAF and a Prison Service pensions in the UK. But is may be worthwhile electing to pay tax on those pensions in Cyprus - see Pension Christmas present from HMRC.
> 
> Regards,


Nigel,

I wonder if it's possible to have one of these pensions taxed in UK and one in Cyprus to maximise the tax free allowances in both???

I'm not expecting an answer Nigel, just throwing it out there.

Garry


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## nhowarth (Dec 6, 2017)

GSmith said:


> I wonder if it's possible to have one of these pensions taxed in UK and one in Cyprus to maximise the tax free allowances in both???


If you have a government service pension and a non-government pension, you pay tax on the non-government pension in Cyprus and tax on the government service pension in the UK.

If you have two or more government service pension you can't elect to pay UK tax on one of them and Cyprus tax on the other(s).

See Pension Christmas present from HMRC.

Regards,


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## GSmith (Nov 9, 2015)

nhowarth said:


> If you have a government service pension and a non-government pension, you pay tax on the non-government pension in Cyprus and tax on the government service pension in the UK.
> 
> If you have two or more government service pension you can't elect to pay UK tax on one of them and Cyprus tax on the other(s).
> 
> ...


Wow, that opens up some tax planning possibilities and sounds too good to be true Nigel. Many thanks.


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## nhowarth (Dec 6, 2017)

You're welcome Garry

My wife has a Govt. service pension and the state retirement pension. She has them taxed in the UK and Cyprus respectively to minimise her tax liability.

Regards,


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## Zoom zoom (Jun 26, 2019)

When you fill in your Cyprus tax form you are asked to declare your world wide income . Are you saying we can leave off income that is taxed in the U.K. ?


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## nhowarth (Dec 6, 2017)

Hi Zoom Zoom

I can't say whether you'll still need to declare your worldwide income. We'll have to wait and see what the Tax Return form for 2019 looks like.

There is a field on the 2018 Tax Return 'Less: Overseas Tax' - maybe that's how it will work.

But your guess is as good as mine.

Regards,


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## nhowarth (Dec 6, 2017)

mikensue26 said:


> Am I correct in saying tax forms are completed in July for the current year starting Jan 1st to Dec 31st.


I think that's how it's supposed to work, but I've been paying tax here since 2002 and haven't done it that way. E.g. Tax for 2018.

At the beginning of 2019 I calculate the total pension I received in 2018. (I download a bank statement for the whole of 2018 to calculate).

Next, I convert the Sterling figure to €uro using the European Central Bank's average exchange rate for 2018 - see https://www.ecb.europa.eu/stats/pol...change_rates/html/eurofxref-graph-gbp.en.html

That's the figure I use for my 2018 tax return.

As soon as I've completed and submitted the tax return, I pay the tax.

Regards,


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## David_&_Letitia (Jul 8, 2012)

mikensue26 said:


> Am I correct in saying tax forms are completed in July for the current year starting Jan 1st to Dec 31st.


Many of my friends here usually complete two returns as you have suggested - one in Jul for the period 1 Jan - 30 Jun using an interim exchange rate, and one in Jan for the period 1 Jul - 31 Dec using the official average exchange rate as promulgated in the Tax Office at the end of each year. When done this way, the official exchange rate is applied for the whole period and may result in an adjustment of the amount owed overall against the amount paid on account in July.

My returns are done through my tax consultant, and like Nigel, they are only required once a year for the period 1 Jan - 31 Dec. Returns are done now online (due before the end of April and payment is also done online via JCC, due before the end of June). I’m not sure if the new requirement to file all Cyprus tax returns online with effect from 2019 means that those who submit 2 x 6 monthly returns must now submit an annual return.

I have 2 x service pensions (one is for 25 years Royal Marines service and the other for 17 years Army service). Proof of pension income is provided by the annual P60s which I receive from Equniti every year. As I am taxed in Cyprus, my P60s indicate a NT UK Tax Code (ie No Tax).


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## mikensue26 (Jan 6, 2019)

David_&_Letitia said:


> Many of my friends here usually complete two returns as you have suggested - one in Jul for the period 1 Jan - 30 Jun using an interim exchange rate, and one in Jan for the period 1 Jul - 31 Dec using the official average exchange rate as promulgated in the Tax Office at the end of each year. When done this way, the official exchange rate is applied for the whole period and may result in an adjustment of the amount owed overall against the amount paid on account in July.
> 
> My returns are done through my tax consultant, and like Nigel, they are only required once a year for the period 1 Jan - 31 Dec. Returns are done now online (due before the end of April and payment is also done online via JCC, due before the end of June). I’m not sure if the new requirement to file all Cyprus tax returns online with effect from 2019 means that those who submit 2 x 6 monthly returns must now submit an annual return.
> 
> I have 2 x service pensions (one is for 25 years Royal Marines service and the other for 17 years Army service). Proof of pension income is provided by the annual P60s which I receive from Equniti every year. As I am taxed in Cyprus, my P60s indicate a NT UK Tax Code (ie No Tax).


Hello David & Letitia
I have not completed any tax forms as yet. 
This' official average exchange rate as promulgated in the Tax Office' Is this figure available on the web site during January?


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## David_&_Letitia (Jul 8, 2012)

mikensue26 said:


> Hello David & Letitia
> I have not completed any tax forms as yet.
> This' official average exchange rate as promulgated in the Tax Office' Is this figure available on the web site during January?


I’m 90% certain that it is not promulgated anywhere *except* in the Tax Office. However, as my tax consultant does all my returns online for me, I can’t be 100% certain. Many of my friends, though, describe a delay before the *official* average rate is actually displayed. Some friends I know actually ignore the promulgated rate and instead, work out their own exchange as accurately as they can over the year based on when they actually exchanged currency £ to €. No one has ever, to my knowledge, been questioned or ‘pulled’ by the Tax Office for doing this, even when it works to their advantage.


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## nhowarth (Dec 6, 2017)

As far as I am aware, there is no *official* Sterling/Euro exchange rate. I asked at the Tax Office in Limassol what rate I should use and they advised me to speak with my accountant.

Also, on another bulletin board someone asked what exchange rate they should use I advised them to use the average ECB rate I referred to earlier. Several replies followed and number of weeks later smeone gave the 'official' figure, which was the same as the one I used.

Regards,


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## David_&_Letitia (Jul 8, 2012)

mikensue26 said:


> Hello David & Letitia
> This' official average exchange rate as promulgated in the Tax Office' Is this figure available on the web site during January?


Having just checked the Cyprus Tax Department Website, the information is there, but whether the site is updated on 1 January each year, I don’t know. Tax doesn’t have to be paid until May/Jun, so I’m sure that the information would be provided in reasonable time! Here is the link to the Relevant page of the Cyprus Tax Department. 

https://www.mof.gov.cy/mof/tax/taxdep.nsf/All/9C3D121FF45D63A2C2258259002758F7?OpenDocument

By clicking on the link for average annual exchange rates, it takes you to pages controlled by the ECB to gather the information. Here is the link to every annual average exchange rate from 2000-2018 which is quite interesting. Clearly it gives the € to £ rather than the other way around. (Scroll down).

https://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=120.EXR.A.GBP.EUR.SP00.A


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## nhowarth (Dec 6, 2017)

Hi David & Letitia

The links to the exchange rates you've given are the daily rates. To get the average over the year visit https://www.ecb.europa.eu/stats/pol...change_rates/html/eurofxref-graph-gbp.en.html

Select GDP vs EUR to get the conversion from Sterling to Euro.

Complete 'From' and 'to' for the period and select.

For 2018 you will get this:

Change from 1 January 2018 to 31 December 2018
Minimum (28 August 2018): 1.1028 - Maximum (17 April 2018): 1.1590 - Average: *1.1304*

Regards,


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## David_&_Letitia (Jul 8, 2012)

Thanks Nigel.


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