Expatriates living in Cyprus should review their tax and estate planning, investments and pensions once a year to confirm they’re up to date.
The new year is a good time to reflect on the previous 12 months and look ahead to what the coming year may bring. This should always include a review of your financial planning to ensure it is up-to-date and on track to protect your family’s long-term wealth.
Here we are at the start of another year, when we tend to reflect on the previous 12 months and look ahead to what the coming year may bring. It is a good time to reflect on your financial planning and ensure it is up-to-date and designed to protect your long-term wealth for you and your family.
Brexit
Perhaps the biggest concern for many British expatriates living in Cyprus has been Brexit and the uncertainty over residence rights and healthcare.
On 8th December 2017 the UK and EU presented a joint “progress report” which confirmed that they agreed to maintain existing rights for EU nationals settled in the UK and Britons in the EU.
If you already have official residence status in Cyprus, you should be able to look forward to a secure future here. The rules for healthcare also remain the same as now.
If you have not yet registered as tax resident, the clock is ticking. You need look at obtaining official residence ahead of the UK’s withdrawal date, scheduled for March 2019. Take specialist advice on how to benefit from the Cyprus tax rules to ensure you are in the best position to enjoy your new life here.
If you are still at the planning stages of moving to Cyprus, you may wish to accelerate your plans so you can become resident before March 2019. The same applies if you are thinking of moving from Cyprus to another EU country – Britain’s request for onward freedom of movement has been deferred to future talks.
Tax planning
It is always a good idea to review your tax planning from time to time to confirm it is up-to-date. Take advice to ensure you are taking advantage of the tax planning opportunities available in Cyprus. The right tax-efficient arrangements can keep most of your investments in one place and help you legitimately avoid paying too much tax.
The new global automatic exchange of information regime, implemented through the Common Reporting Standard, is well underway. 50 jurisdictions, including Cyprus and the UK, began collecting client data from January 2016 and made the first exchange by September 2017. Another 50 jurisdictions will start sharing by September 2018.
Cross-border tax planning is complex, especially if you earn income in one country and live in another. Are you sure you are paying tax in the right place? Specialist advice can give you peace of mind as well as potentially save you tax.
Any questions? Contact us for personalised advice.
Savings and investments
In November 2017 the Bank of England increased the UK interest rate for the first time in over ten years. It was by no means a seismic shift – just back to 0.5% from 0.25%. And has your bank passed on the full rate increase to you? Research by Moneyfacts shows that banks took a month to start increasing rates, but savers are not getting the full benefit. Keeping too much of your retirement savings in cash can be risky, if you are not earning enough to keep pace with inflation.
Successful investing is about managing risk versus return and having a well-thought out strategy specifically based on your personal circumstances, time horizon, needs, aims and risk tolerance. You should obtain a clear and objective assessment of your appetite for risk, then match your profile to the optimum portfolio. Ensure you have adequate diversification, so you are not over-exposed to any given asset type, country, sector or company.
You should then review your investments around once a year, because as asset prices rise and fall your portfolio can become unbalanced, and your circumstances may have changed.
Pensions
Today’s pension landscape is quite different from a few years ago, so spend a little time to establish the best course of action for your pension funds. There are more choices than ever, but this means that great care must be taken to ensure you make the right decision for your objectives and to protect your retirement savings. Weigh up all your options, as well as the tax implications and opportunities in Cyprus, to establish the best course of action for you.
Estate planning
It is important to review your estate planning after moving to Cyprus. The first step is to establish your goals. Who would you like to benefit from your estate? Are you happy for them to have control over the money? When should they receive the funds? Will they have to pay UK inheritance tax and, if so, can you take steps to avoid or reduce this liability?
You then need to obtain specialist advice to ensure that your estate plan is specifically set up to achieve your wishes for your heirs.
Cyprus imposes a forced heirship regime under its Wills and Succession Law. The majority of an estate must pass to the surviving spouse and children, in defined proportions. UK nationals can use the EU succession regulation ‘Brussels IV’ to instead apply British law to their estate. However, it is still unclear how this works in practice and it could add costly delays to the probate process. There are alternative options to ensure your estate is distributed as you wish, so take expert advice to establish the most suitable solution for your family.
Blevins Franks has been providing tax planning and wealth management advice to expatriates in southern Europe for decades, with a dedicated office in Cyprus for 15 years. We have in-depth knowledge of Cyprus taxation and compliant tax planning opportunities. We take a holistic approach to tax advice, estate planning, investments and pensions, and specialise in reducing tax on invested capital, pensions, wealth and inheritance.
