Non-Cypriot individuals residing in Cyprus pay income tax at a flat rate of 5%. This applies to the amounts remitted to Cyprus from pensions or income from overseas investments. The first CY£2,000 per annum are exempt, if you are retired. Personal effect, household goods and furniture may be imported duty free by immigrant retirees, provided that they are for personal use and have been in use for some time (approx 1 year). There is no duty on one car and retiree couples benefit from the additional concession of two duty free cars.
There is no inheritance tax in Cyprus.
Double taxation treaty
Compared with other international finance centres, Cyprus offers a distinct benefit in the form of double taxation treaties. Agreements with an increasing number of countries eliminate the double taxation of income earned in any one of these countries. In practice the tax levied by one country is credited against the tax levied in the taxpayer’s country of residence. Where different tax rates apply, the tax payer will ultimately not pay more than the higher of the two rates of the respective countries. Such treaties combined with very favourable tax rates for international business entities in Cyprus open the doors to significant tax planning opportunities. The fact that Cyprus is not considered a tax haven but rather a country offering tempting tax incentives expels the distrust that international tax havens often arouse. Double taxation treaties exist between Cyprus and the UK and Ireland.