Changes to UK/Cypriot Double Taxation Agreement

[Rita Sherry]

Hudswell

I have this afternoon been reading the actual proposed 2018 Agreement (yet to be ratified)and the relevant provision to which your quotation refers can be found in Article 18. This is clearly a shortening of the relevant article 19 of the 1974 Agreement. However I am having trouble reconciling the wording as to my mind it is somewhat ambiguous. Consequently I have sent an enquiry both to HMRC and the British Consulate seeking clarification of the wording (which I would add is slightly different to those you have quoted and those in Article 18).

I can see some essence in the government's thinking if it is to be interpreted as you have quoted in that, as the Government personnel now retired are receiving pensions provided out of State funds, then it follows any tax liability should go to the country from whence it is paid. But and it is a big but why should that be the only criteria? To my knowledge individuals have made enhanced personal contributions to their pension funds etc. I feel that once this is released there will be more than dismay expressed by those concerned.

As an example re wording one subsection of Article 18 refers to ........unless the person is a resident of Contracting State and a national.

In Article 4 para 3(a) a person is deemed resident only of State in which he has permanent home available to him - if in both States deemed resident only of State in which personal and economic relations are closer.

I am wondering whether the Yellow Form we are all being urged to replace might give some added status after all - albeit it is a "permit of residence" not of a "national".

Cannot understand why the British Consulate has not published what is, to some people (myself included), a rather important piece of legislation affecting their livelihoods.

If anything positive comes from my enquiries I will post again.

Rita

[Rita Sherry]

I have received acknowledgments from both HMRC and the British Consulate and will post again when I receive a substantive reply.

Rita

[Shogun]

I also understood that to qualify for the ‘exemption’ you had to be a National AND a Resident
If this is correct, I am only a resident which means I should pay tax on my military pension in the UK…however, what I receive is below the personal allowance and therefore wouldn’t pay tax.
In Cyprus, I pay tax on my Service Pension; Private Pensions and UK State Pension but if I remove my service pension from my Cyprus tax return, it will then take me under the Cyprus personal allowance and therefore won’t pay tax here either….seems like a result for me or am I reading it wrong?

[trevnhil]

I would think it remarkable if you could have the allowance from Both countries. But who knows.. Time will tell, but of course people want to know now.

[darrow]

I have a small LG pension, but I don't earn enough overall to be taxed. Getting rent from UK property takes me into the tax arena. I was wondering if, we elect to become resident and a national, how this will affect the SDC which we are exempt from paying until after 17 years in Cyprus? If we then become liable to pay this, that is a 30% hike on some income. I can see this becoming a nightmare to police!

[trevnhil]

It sounds too easy to me.. I can't see them giving that perk away.

[Mike J]

Don't think the British High Commission can publish something which has yet to be ratified which actually gives people time to take action if they wish. i understand this will be part of the presentation of the Chancellor's autumn statement and merely brings Cyprus into line with the other double taxation treaties with EU countries.I believe only Holland and Greece have yet to agree to sign.
Those who face a significant increase can opt to take out citizenship of Cyprus and obtain a Cyprus passport if they have been here for 7 years. Various companies offer to take you through the process with the cost seemingly ranging from €2,400 upwards to €20,0000 ( though this is for Russians i believe) best to do the sums and then talk to a financial advisor. The window fo opportunity is I understand till the Autumn statement and UK applicants need to state that because of Brexit they want to remain part of Europe and obtain an EU passport. After the ratification is announced and with Brexit in 2019 it will be far more difficult to get agreement from HMRC as it will be seen as an attempt to evade paying UK tax .