# Government Pensions



## soppik (Apr 30, 2012)

Regarding civil servant or HM Forces pensions: can they be paid directly into a Cypriot bank account? Also, HMRC website states these types of pension are subject to tax in the UK regardless of where you live in the world, do they get taxed again in cyprus? If they are your main source of income, what other tax are expats subject to in Cyprus?


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## Veronica (Apr 5, 2008)

The UK and Cyprus have a double taxation treaty so that you cannot be taxed twice on the same income.


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## soppik (Apr 30, 2012)

Veronica said:


> The UK and Cyprus have a double taxation treaty so that you cannot be taxed twice on the same income.


Thank you once again.


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## chrisjac (Jan 30, 2011)

soppik said:


> Regarding civil servant or HM Forces pensions: can they be paid directly into a Cypriot bank account? Also, HMRC website states these types of pension are subject to tax in the UK regardless of where you live in the world, do they get taxed again in cyprus? If they are your main source of income, what other tax are expats subject to in Cyprus?


Pensions paid for former service to the UK Government are known as Government Service Pensions. Pensions paid for former employment with the H M Forces, Civil Service and Foreign and Commonwealth Office are all regarded as Government Service Pensions.



Hi Soppik, 

In answer to your question, the extract below is from the HMRC website - in essence, Cyprus is the only EU state outside the UK where a HMG pension can be taxed outside of the UK , depending on your pension, usually around 5% max but only on income above 19.500 Euro p.a - which is one of the reasons why Cyprus is becoming very popular with ex Governemnet employees (e.g.Civil Servants/Military/Police/Fire service/Teachers etc !)

"Usually Government Service and Local Authority Service Pensions paid to British nationals living overseas remain taxable in the UK. You will still be eligible to receive full UK Personal Allowances and reliefs. 

The main exceptions are Australia, Canada, New Zealand and Cyprus where exemption for Government Service and Local Authority Service Pensions can be claimed.

If an individual is a national of and resident in an overseas country, exemption under a Double Taxation Agreement may also be due for a Government or Local Authority Service Pension.


Please refer to the DT Digest (PDF 168K) or contact HMRC further information.

The rules regarding the treatment of Local Authority Service pensions under Double Taxation Agreements are very similar to those applicable to UK Government Service Pensions. However not every Double Taxation Agreement is the same. You should refer to the DT Digest or contact us if you need further clarification."

Good Luck!
ChrisnJac 
(Two ex-goverment workers soon to be retiring to Cyprus..)


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## soppik (Apr 30, 2012)

chrisjac said:


> Pensions paid for former service to the UK Government are known as Government Service Pensions. Pensions paid for former employment with the H M Forces, Civil Service and Foreign and Commonwealth Office are all regarded as Government Service Pensions.
> 
> 
> 
> ...


Thanks for this reply, it's very helpful.


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## Veronica (Apr 5, 2008)

chrisjac said:


> Pensions paid for former service to the UK Government are known as Government Service Pensions. Pensions paid for former employment with the H M Forces, Civil Service and Foreign and Commonwealth Office are all regarded as Government Service Pensions.
> 
> 
> 
> ...



Actually Chrisnjac you have got it wrong.

In Cyprus you can choose one of two taxation methods. You can choose to go with the personal allowance of 19.500euros before tax or you can choose to pay 5% on all of your income if you have large pensions and income from investments etc.

Therefore most British retirees who have only their UK government pension will pay no tax at all if they choose the personal allowance. Those who have extra income from personal pensions, investments etc can decided which method to choose depending on which works out most beneficial for them. Below is a table of taxation rates.

– up to EUR19,500 nil

– from EUR19,501-28,000 20%

– from EUR28,001-36,300 25%

– above EUR36,300 30%

In order to qualify you will only need to live in Cyprus for a minimum of 183 days per year. Another advantage is the fact that the inheritance tax in Cyprus has been abolished


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## chrisjac (Jan 30, 2011)

Veronica said:


> Actually Chrisnjac you have got it wrong.
> 
> In Cyprus you can choose one of two taxation methods. You can choose to go with the personal allowance of 19.500euros before tax or you can choose to pay 5% on all of your income if you have large pensions and income from investments etc.
> 
> ...


Hi Veronica, Not actually wrong though surely, maybe not just such a comprehensive answer as your own..anyhow between us perhaps Soppik has the answers that he was seeking eh..:clap2:


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## Veronica (Apr 5, 2008)

chrisjac said:


> Hi Veronica, Not actually wrong though surely, maybe not just such a comprehensive answer as your own..anyhow between us perhaps Soppik has the answers that he was seeking eh..:clap2:


Your answer said 
"usually around 5% max but only on income above 19.500 Euro pa" 
If you choose the 5% across the board method you would also pay that on the first 19.500.

If you work that out, if you chose to go the first route and you earned 28.000. 
you would pay nothing on the first 19.500 but on the next 8.500 you would pay 20% which is 1.700. If you go by the second method, you would 5% across the board on all of the 28.000 which is 1.400.
On the other hand if you earn 24.000 and you choose the first method you pay 20% on 4.500 which is 900 but if you chose the second method you would pay 5% on all of it which is 1.200.

So it depends on how much more than 19.500 you earn to which method would be best for you. Certainly anything more than 28.000 you would opt for the 5% across the board.

Simple really


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## chrisjac (Jan 30, 2011)

Veronica said:


> Your answer said
> "usually around 5% max but only on income above 19.500 Euro pa"
> If you choose the 5% across the board method you would also pay that on the first 19.500.
> 
> ...


OK Veronica, agreed that the opening statement of my reply was a little short on detail and your correction on this point is accepted, however the main thrust of Soppiks question was around being able to have their government pensions paid directly into a Cyp bank account without first being taxed in the UK, which they can as per the extract from the HMRC website. In addition the UK has double tax treaties with many Countries across the world but it still remains the case that, with the exception of Cyprus, UK Gov Pensions are still subject to UK income tax rules.
Just trying to be helpful really..

Chrisnjac


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## totorama (Jun 12, 2010)

Actually Veronica I think you will find you do not pay tax on ALL €28,000 in the case of the 5% option, you still get €3,420 before tax. 

Amount of Pension Income	Tax Rate
€0 - €3,420	0%
€3,420+	5%
Other income such as bank interest and dividends from shares are exempt from income tax, however they are taxable by way of Cyprus Defence Levy (Special Contribution for Defence)


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## Veronica (Apr 5, 2008)

Between us we will eventually get it 100% right


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## soppik (Apr 30, 2012)

Thanks everyone for the info. With income from pensions being around 14000 euro, plus a little part time work in Cyprus, I shall be below the 19500 threshold. So next step appears to be submitting F85 to HMRC, and S1 to Newcastle for healthcare side. Register for yellow/pink slip with 8 days of arrival in Cyprus, get rental agreement, move in, open bank account, go to Cypriot tax office, then amend bank details fo rpension payment. Then get health insurance, buy a car and insure, sort mobiles, internet/phone. Last step, sit back and relax, prepare for visitors, have I missed anything?


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