Cyprus investors ‘win on both sides’

A stable currency and no inheritance tax makes Cyprus a popular place for retiring Brits…

Pensioners who bemoan Britain's high taxes and poor weather can escape both without leaving the European Union by moving to an English-speaking country with a flat rate of income tax at 5 per cent or annual allowances of more than £14,600 tax-free. Better still, savers who have retired can receive interest from bank deposits and sharholdings entirely free of income tax - and inheritance tax has been abolished on this Mediterranean island.

Jonathan Spring-Rice, wealth manager at independent financial adviser Towry Law International, says: "This Mediterranean island's tax regime is one of the biggest reasons pensioners quit these shores to retire there. But it also has the added advantages of a low cost of living and low crime rate."

Economic maturity

Justin Rix, international tax director at Grant Thornton, says: "An expatriate pensioner can elect to pay tax at 5 per cent on any pension income above a threshold of €3,417 (£2,588). But if they wish, they can choose to be taxed under the normal tiered rules, in which case the first €19,500 is untaxed – a generous sum – rising to a rate of 30 per cent on pension income above €36,301.

Spring-Rice adds: "You win on both sides; either benefiting from an incredibly low tax rate or a huge personal allowance. And you simply have to be in receipt of a pension, so you can benefit from this tax regime even if you take early retirement at say, 55, and move there."

Mark Bodega of currency exchange specialist HiFX says: "While the Cypriot pound was effectively fixed against the euro for the last two years or more, this recent announcement confirms the island's economic maturity and the promise of a share in the spoils of the recently improved EU-wide growth story."