Cyprus Investing To Draw In Wealthy Expats
This unique geographic position has played an important part in its turbulent past throughout history. The Mycenaean Greeks established their civilisation 3,500 years ago and the island has had Greek roots ever since. Many other cultures followed thereafter, including the Phoenicians, Assyrians, Egyptians, Romans, Franks, Venetians, Ottomans and British. All have left behind traces which have contributed to the culture of Cyprus.
Cyprus gained its independence from Britain in 1960. Following many years of nationalist violence which displaced Turkish Cypriots, a coup d’état by Greek Cypriot nationalists in 1974 was followed by a Turkish invasion of Cyprus. This ultimately resulted in the declaration of a separate Turkish Cypriot State in the north of the island. Never recognised by any country other than Turkey, this division of the island has been in place ever since. Despite this ongoing dispute, Cyprus is regarded as one of the most safe and secure destinations in this part of the world.
Cyprus is the third largest island in the Mediterranean Sea at just over 9,000 sq km (240km long by 100km at its widest point). It enjoys an average of 340 days of sunshine a year giving plenty of opportunity to enjoy the 49 blue flag beaches on the island. It has long hot summers with temperatures over 30°, and even in the winter the temperature is around 10°. In the Troodos Mountains temperatures are lower at around 24° in summer and 3° in the coldest month of January and snow and rain is seen. The island allows you to enjoy skiing and then return to the sunshine on the coast.
The official languages are Greek and Turkish, but around 80% speak English. The legacy of British colonial rule is that the legal and banking systems are based on the UK model. The population is 1.2 million and British expats are the largest group, with over 62,000 permanent British residents. Number of Russians and Chinese are increasing.
The often-heard phrase ‘Siga, siga’ (slowly, slowly) reflects the emphasis on ensuring that you take the time to enjoy life. They are an industrious nation but believe in balance. Settling in to the country is helped by the large number of expat communities and the fact that there is so much to do on the island.
In Cyprus tax residence is established if you spend 183 days in Cyprus cumulatively in a calendar year. There is a tax treaty with the UK and other countries. Blevins Franks advise that as you cannot continue to pay into an ISA once you have left the UK you should look at some of the tax-efficient vehicles available in Cyprus that allow income and capital gains to roll-up tax-free and to make withdrawals that are also treated as tax-free.
Blevins Franks advise that if you have UK-source pension income the income will be taxable solely in Cyprus with two options available for how it is taxed allowing you to choose the most advantageous based on the amount involved. Also, if you crystalize a UK pension you may be able to avoid tax in the UK and Cyprus, but specialist advice will be required.
There is no inheritance tax in Cyprus, but your domicile in the UK or elsewhere will impact your liability there.
The property market in Cyprus fell in value during the banking crisis of 2013, but has since recovered and has seen continuing growth in 2018 with property sales volumes in the first five months off the year up by 31% on the corresponding period in 2017. Prices increased by 3.7% against the same quarter in 2017.
There were more properties bought by foreigners than Cypriots in the last year according to Nigel Howarth, editor of the website Cyprus Property News. 35% of non-Cypriot owned property is currently held by British expats, but there is significant growth in interest from Asian and Russian investors.
Paphos and Limassol were the most popular destinations for foreign investors. Apartments are most popular in Limassol, but villas are the target for expats in Paphos according to a survey by PwC Cyprus. The survey also points to the increase in the number of building permits issued as an indicator that the growth is expected to continue.
Cyprus is increasingly a draw for wealthier expats and developments around Limassol are targeting this market with many prime and ultra-prime properties being developed. The Limassol Marina is a development of 40,000 sq metres with 74 villas and 162 apartments. The marina can take 650 yachts including the ability to take super yachts. This upmarket development together with the golden visas is intended to place Cyprus as an attractive destination for wealthy investors, including those from Asia and Russia.