Expats in Cyprus face paying higher taxes as the Cypriot government aims to save €975 million over the next four years to reduce its deficit gap, according to wealth managers.
It is understood that President Demetris Christofias is looking at tax rises rather than spending cuts, believing there is room for higher taxes, both direct and indirect.
These could include VAT increasing again, higher income tax and changes to local property taxes, says tax and wealth management provider Blevins Franks.
‘We understand that the government is considering reducing the taxable threshold for local property tax from €120,000 to €40,000, and also proportionally increasing the tax rates.
We cannot rule out the possibility that it will also look to earn more revenue from income taxes, whether from employment or income from capital,’ the firm’s latest analysis report says.
But it also points out that tax rates in Cyprus are still comparatively low compared with other popular expat destinations. When it comes to tax on investment income, in Cyprus it is 15% tax (defence contribution) on bank interest and 20% on dividends. Also there is still no tax on capital gains from shares and securities.
In Spain, for example, all savings income is grouped together and taxed at between 21% and 27%, depending on the amount. In Portugal the fixed rates of tax applied to bank interest and capital gains on securities increased from 20% to 25% last year.
Interest is taxed at 24%, dividends at 21% and capital gains at 19% in France, and French residents also pay 15.5% social charges. The government wants to start taxing this income at the scale rates of income tax, so higher earners will pay more tax.
It is understood that President Demetris Christofias is looking at tax rises rather than spending cuts, believing there is room for higher taxes, both direct and indirect.
These could include VAT increasing again, higher income tax and changes to local property taxes, says tax and wealth management provider Blevins Franks.
‘We understand that the government is considering reducing the taxable threshold for local property tax from €120,000 to €40,000, and also proportionally increasing the tax rates.
We cannot rule out the possibility that it will also look to earn more revenue from income taxes, whether from employment or income from capital,’ the firm’s latest analysis report says.
But it also points out that tax rates in Cyprus are still comparatively low compared with other popular expat destinations. When it comes to tax on investment income, in Cyprus it is 15% tax (defence contribution) on bank interest and 20% on dividends. Also there is still no tax on capital gains from shares and securities.
In Spain, for example, all savings income is grouped together and taxed at between 21% and 27%, depending on the amount. In Portugal the fixed rates of tax applied to bank interest and capital gains on securities increased from 20% to 25% last year.
Interest is taxed at 24%, dividends at 21% and capital gains at 19% in France, and French residents also pay 15.5% social charges. The government wants to start taxing this income at the scale rates of income tax, so higher earners will pay more tax.
