Welcome to tax bytes for expats. The top tax tips

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answer the common queries and concerns expats have when moving to

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simply we'll focus on the irish and international

tax issues to be aware of to ensure you save time,

money and stress. Hi everyone,

welcome to this episode of Tax Bytes for expats.

This week we are talking about Cyprus tax in

Cyprus. What a move to Cyprus looks like, what you need to be aware

of. And we're joined by Charles Sava of Sava and

Associates. Sava and associates are a fully licensed,

medium sized firm based in Cyprus who employ

almost exclusively former big four chartered accountants and

cypriot legal experts. They have a wealth of experience

from across the largest and most reputable law

firms in Cyprus. They have a wealth of in house

expertise and knowledge, and they've earned the trust of some of the world's

biggest international companies, banks and high net worth

individuals and their families. Charles Saba heads them

up and he is with us today to talk to us about taxes in

Cyprus. Thank you very much for joining us Charles, it's lovely to have you with

us. Thank you very much for having me and

the opportunity to present a bit of Cyprus

Cyprus tax and hopefully we will catch

some people's interests and be able

to explore some of the great opportunities that

the islands tax regime primarily has to

offer. Cyprus has so much to offer. I have a

special affinity with it myself because I got married there many years

ago. Yeah, great place. But tell us that before

we talk about Cyprus. I'm sure people love to hear a

little bit more and perhaps more eloquently than I put it about yourself. Tell

us about yourself, Charles, your background, how you ended up in tax, what led you

to today, essentially? Well, you may or may not

have picked up from my accent. I'm canadian by

background. My mother and father are greek Cypriots,

but I was born in Canada, educated and

raised there and I didn't actually come to Cyprus until

I was 24. I

too was in a

position of relocating to this island

that I had not really known too much about prior

to visiting or to relocating here back in

2001. Although it did take some time to get

accustomed to the island. I have to tell you, I fell

in love with this place after a

couple of years being here. I was also

fortunate enough to get involved in the professional services

space where I feel you can build a

good, solid career. I think what kept me in

Cyprus was the fact that I finished my

studies in Canada, came here and got this

opportunity to do a chartered accountancy designation

with one of the big four, Ernst and young. And that kept me

busy during those initial few years in

Cyprus, where there was a big adjustment, leaving a big city

in Toronto and coming to a mediterranean

island. So that kept me busy and it

gave me that time frame that I needed to

adjust to the island. And as I said, I've fallen in

love with the country, with the people, with

the traditions. It's a beautiful, beautiful place, an

even more beautiful and simple tax

regime. So I've been involved

in the tax space here in Cyprus from

the very beginning of my career in

2001 in Cyprus. I'm a tax

professional by background and I

spent a good part of my day, every single day,

talking to clients and their advisors

and international tax advisors all over the world,

helping to educate them on what the opportunities are in

Cyprus as a result of our tax regime

and identifying opportunities, how

professionals such as yourself can assist your own

client base with identifying

opportunities, from personal tax migration

to corporate tax optimization. Okay, that leads

nicely then, into my next question, which is, give us the quick,

if there is such a thing synopsis of how I suppose

individuals who are planning a relocation to somewhere like Cyprus

would be treated. How does the income tax system work? Is there

capital gains? Is there wealth taxes? Those types of things are usually of

interest to people who are listening. Okay, I would

answer your question by presenting our non

domicile scheme. We have what is often

considered by fellow international tax

advisors around the world to be what is likely the

world's or onshore tax worlds, I should say,

most attractive, beneficial non domicile

regime. And I would also add, it's probably the most simple

as well, because I can explain it to most clients, as

I did with you when we initially met in

probably under a minute. What the non domicile scheme here in

Cyprus allows someone to do is

obtain a 17 year tax holiday

on essentially the three sources of income of

most by net worth and divisions being

worldwide dividend income, interest income

and profits on the disposal of securities,

securities being, of course, stocks, bonds.

So these three forms of income are,

in most cases, the three most common sources of

income you will see for most high net worth

individuals and their families. So the non

domicile scheme allows a 17 year tax

holiday, and it requires two major

obstacles to be conquered by the

non resident who is migrating their personal

tax residency to Cyprus. Number one is they

must be willing to spend 60 days in a

calendar year physically in Cyprus. And number

two, they cannot be more than six months in any other

one country. So we often call

the 60 day route to qualifying as

a non domicile as the 60 day rule.

I could say the primary attraction

point of the program, because, as you know, most non

domicile programs, the UK's non domicile

scheme, the portuguese non

habitual resident scheme that was recently

phased out, they require significant actual

residency in the country to qualify as a tax resident.

Whereas Cyprus has come along and introduced an on

domicile scheme that only requires the

individual to be physically present in Cyprus for

60 days, which doesn't have to be continuous. So it's

two vacations, for example. It can be split

in however way the resident likes

within a calendar year. And that eliminates

probably the most difficult task that we, as

international tax advisors have, which is a very

non tax discussion we need to have with our

clients on. Well, what would it be like to live

in Cyprus? What would it be like to live in Portugal? What would it

be like to live in the UK? Of course, I'm more than happy

to give my opinions on that, especially

as someone who came here 22 years

ago, essentially as a foreigner himself. But as

you can appreciate, it's a very subjective

discussion. Yeah. One of the things that comes to my mind, I'm just

thinking about people who might be listening to this is, so maybe if we

use an example of the type of clients that you

generally find taking advantage of the regime

we're talking about. Give me an example of a client, maybe a recent

one, obviously, without mentioning any names. Who's taken advantage of this? What did their day

to day life look like? Because there's probably going to be a group of

people listening to this thinking. Okay, so are we saying that if I

holiday for two months in Cyprus, I only have a

cypriot tax headache to think of? And I suppose from an irish perspective, my

response would be, no, it's more complicated than that. The irish revenue aren't letting you

go that quickly. So tell me how it works when you're

dealing with uk and irish clients would often have similar fact

patterns, because our tax law is not

vastly different. What does it mean practically, for people who do make the move

to Cyprus? Is there a lot of people only spending 60 days a

year there and qualifying for it, as well as not paying tax in their

home country? The majority of our clients

are European Union nationals,

which makes the task of

relocation much less cumbersome from an

immigration point of view, because taxation is one

thing, and then you have to also ensure that you have the

proper immigration permit to reside in Cyprus.

As you know, European Union nationals

have free movement within the EU,

and that allows for a very easy transition. In terms of the

immigration logistics of relocating to

Cyprus, we do have a good number of non eu

nationals taking advantage, of course, of this very

attractive non domicile scheme. However,

the mechanics of securing the

necessary and proper immigration permit are

considerably complex. I don't want to make it sound

like it's a big, difficult task, but it's

obviously more complex than someone from

Ireland, someone from Italy, someone from Germany or France

relocating to Cyprus. That's the nationality

aspect of the majority of our clients. Then

I would say the vast majority of

clients, whether they're EU nationals or non EU

nationals that take advantage of this program,

have their three main sources of income being

the three exempt incomes of this program. So a lot

of them are business owners that own private companies

and derive the majority of their income from

dividends. Also, the nature of their business is such

that they don't need to be fixed in one

specific place because we can never forget the

two major requirements for eligibility being

60 days in Cyprus and not more than six

months in any one country. But we also

have a good number of non domiciles

who are actually relocating to Cyprus,

whether that's for work purposes, if

their company has established headquarters in

Cyprus, which has been happening at

a great pace over the last years. If you visit

Limisol, it is now the headquarters of many

multinational companies. There's talks with

Google, with Facebook as well, for

significant presence in Cyprus, and a lot of that is

tax driven. So to circle back to your

question, the vast majority of the non

domiciles that we work with and help migrate their

personal tax to Cyprus do not spend

significantly more in the 60 days that they're

required to spend, because at the end of the day,

that is where the strength of the program lies,

of course, in addition to the categories

of tax exemption. So, okay, that's answered the

question. Well, because I think what you're saying is, by virtue of the

rules, it seems to suggest they wouldn't necessarily be a

tax resident of another jurisdiction. And I think probably

the takeaway I want people to have listening to that is

that's probably contingent on your circumstances. So let me give you an

example. Absolutely. If somebody qualified for the Cypio

regime, based on what you're saying, but spent in Ireland four

and a half months of every year here, they wouldn't break their irish residency. So

therefore the regime would be potentially not as

optimal for them. So this is where I suppose each individual

circumstance and you've alluded to that is different, needs to be looked at.

But I mean, what a fantastic incentive. So for

context, and I know we discussed it briefly before, Ireland has a remittance basis of

tax which is linked to foreign domicile. So a remittance

basis of tax being that foreign income and foreign gains are not taxable in Ireland

unless brought here. I get the impression from you that Cyprus goes one step

further and actually exempts the three types of income that you've

mentioned. Correct. Okay. So that's a key difference and also

a key draw of the cypriot scheme. But when we're talking about

comparisons, can you explain what domicile is

under cypriot law? What is the meaning of an individual's domicile

from a tax perspective? Okay. From the

tax definition of domicile follows

the legal definition which was enshrined in law

many, many years ago. Essentially, someone is

domiciled in Cyprus if they were born here

and have lived 17 out of the last 20

years in Cyprus. So the

determination of whether you're domiciled or not in

Cyprus is typically a discussion we will only have

with a client who's Cypriot by background.

So I too was a non domicile up until

a few years ago and it required some

analysis. In fact, I applied for a tax

ruling back in the day to our tax authorities to

confirm that I am not Dongassov inside

this, because the non domestile program was introduced in

2015. I was a resident in Cyprus from

2001 on and off, permanent resident from

2004 onwards. Whereas

for the vast majority of our clients who are not

Cypriot, who are irish, EU, non EU,

the discussion on are you domiciled in Cyprus? Is not.

Is erupted so easy. Yes, very straightforward in that

regards. Is it consecutive 17 years or is it

17 years in your lifetime out. Of the last 20? So it doesn't have

to be consecutive. Okay. Okay. So in theory, you could restart that

clock. Yes, yes,

exactly. Right. So let's say somebody, you know, they

listen to this, they like Cyprus. Cyprus is a beautiful country. I, obviously, I'm going

to say that because I got married there, but it's, it's a fantastic

place. You know, a lot of people speak English. It's an

easy place from what I can gather, to relocate to

and, you know, close to Europe. So you can still travel if you want

to, good connections and things like that. But what about people who

might be listening to this and they think, oh, this is nice. One of the

other things they need to be aware of. So, for example, if we take a

category of somebody, maybe in their fifties, may have still have social insurance

obligations. Perhaps they have dividends from a foreign

company. Maybe they are looking to draw a pension in future.

What are the tax considerations that they do need to think about? Because obviously it's

not a tax free. No, it's just that exemptions on certain types of

income. So there will be a tax cost, I'd imagine, at some point. Yes, as

you correctly point out, there are clients that

don't fit into these three forms of primary income,

as most high net worth individuals do. So we have

a very significant and attractive

regime for what is loosely termed the ex

part community. Here in Cyprus,

the main tax advantages and

benefits that are offered are on

income, personal tax income. So

earners of €55,000 or more

of income from employment sources

receive a 50% exemption. If your income is

less than 55,000, that exemption comes

20%. There's also an option for foreign

pensions to be taxed at a flat rate of only

5%. And from there on out, as a

cypress tax resident, you are taxed under the

normal tax brackets that all taxpayers

here pay personal income tax. So we have a tax free

bracket from zero to 19 and a half thousand euros,

then a 20% bracket, 25, 30, all

the way up to a 35% tax

bracket. So you are correct in stating that

we're not a zero tax jurisdiction. It's important

that we understand that Cyprus is a full member of the

EU, meaning our taxation system needs

the blessing of Brussels, of course, including the

non domicile scheme that was approved by Brussels before

it was enacted into law.

So these are the main personal

tax incentives given tax

foreigners relocating to Cyprus. On top,

of course, above and beyond the benefits offered by the non

domicile regime. Fantastic regime though it

is. It is absolutely. And so simple, it's

just very basic. There's no

caveats to it. The non

habitual tax resident in Portugal still

taxed your capital gains on the disposal of

securities. This is just a very simple,

straightforward and long lasting program. It's

17 years and, you know, unless you're

someone who's in their fifties or sixties,

the 17 years goes by quickly. I'm

proof of that because I benefited under this program

and I also saw the expiry of it and the difference between

my tax position from one day before and after.

Yes. In terms of day to day life in. In

Cyprus, it's, you know, it's not necessarily something that I think people this side of

the world are familiar with, per se. So what is how

hard is it to get accommodation? You know, is there a large expat

community for people who are interested in the move? You've done it

yourself. What are some of the practical things to be aware of if you're considering,

in addition to some of these obviously incentivizing tax

schemes that we're talking about? It is a beautiful

island. Contrary to popular belief, it

is not a small island. And I say that as a canadian,

Canada being the second largest country in the world.

Cyprus is not a small country. There's five major

cities, all vastly different. You can enjoy

the hustle and bustle of limisol and that

cosmopolitan lifestyle and those 50 some

odd skyscrapers that have been built on the Limassol

seafront that are by far the tallest in the

Mediterranean, to a very different pace

of rural life that is

also present here in Cyprus. So, to go back to your question,

I think it's very important that someone that's

considering relocating to Cyprus above and beyond

the 60 days that the non domicile program

will require them to live here, it's important that they

conduct their due diligence. Come visit the island, see the

different cities. The cost of living varies drastically as

well amongst these areas. So these are all

important things to consider. Do you have

children that will require schooling? Some of the best private

schools, international private schools in the world, have

branches in Cyprus. So it's.

It requires some research, as you

would expect with any relocation to a foreign country. There's

always research. But there's this common misconception we

see among clients that it's a small island

and I'll come for a weekend and we'll see what we like,

what we don't like. I would say take more than

a weekend to see the island. It is

small enough that you can drive from one end to the

other in the same day. But as I said, during that drive you

will cross five very different cities

and provinces, each with its. Its own

unique lifestyle and each carrying a very different

cost of living profile, which is very

important. If people are listening to this and their attention is piqued,

what are the three things you would

suggest? Three tips, three considerations, three takeaways you'd like people

to have? Well, I'm a tax advisor,

so the first point I will make is make

sure you understand the local tax regimes. And

just as important, please make sure you understand the

exit tax issues from your own home

country. You are tax resident somewhere, making a

decision to transfer your tax residency to stuff to

somewhere else being Cyprus. So that said, this

is the reason why we do not, as a company, as a

matter of policy, we do not onboard clients unless

they come along with their own local

tax advisor. We need to ensure that the

client understands not just the taxation

system and benefits in Cyprus, but what it means

to migrate out of their own country. That's a really good

point, actually. And just to kind of jettison from

that, you know, often we'll have clients who

maybe DIY'd their tax return up to the point when they maybe leave

Ireland or, you know, come to move here and. But it's just that

natural point of if you, if you're asking a question in a foreign jurisdiction,

anticipate that you need a local tax advisor to help you. That's a

really, really good point you make there. Yeah, it's

as I've said, it's a matter of very strict

policy in our firm, we will not formally onboard a

client unless they have a tax advisor,

local tax advisor accompanying them

throughout the entire process for personal tax

migration engagements. So

that's the first point I would mention as

a secondary, I would say explore the

investment opportunities and the

Cypress property market. It's been

big, big business here over the last few years,

the development, the real estate development industry, especially

in the towns of Limisol. So

I think it's important for someone and their family

that's thinking to relocate to Cyprus, understand

what business opportunities exist, understand

how the property market works. And then

finally I would circle back to explore

the five major towns, see what feels right for you,

what matches your lifestyle, your expectations

and how you want to live, and

consider where the good schools are for your children, where the good

restaurants and cosmopolitan lifestyle

is based on your own preferences. So those

would be the three major things that I would

advise someone considering relocating to Cyprus.

Above and beyond, of course, the purely tax

consideration. I think that speaks to what a fantastic regime you have

there is that you can provide such practical

advice about the move for things aside from tax. It's so

useful. Charles, people may and I expect will

have queries listening to you. How do people

engage with you when you're working with them as an advisor? What's the best way

for people to. Contact you by email and

mobile phone, especially on the WhatsApp platform?

I'm very active all day. We don't

charge for an initial discussion to

talk about what potential benefits

someone can obtain by transferring their

tax residency to Cyprus or transferring their

business or any of the other sorts of areas that

our office as a service team is engaged with

them. We like to be inviting the

clients so that they can approach us and have an

informal discussion. And then once we see that there's interest

and a potential good fit between the benefits offered and

what the client is seeking to achieve,

then we can move to a more obviously formal

engagement. But a lot of my daily activities,

just informal discussions with clients,

advisors, people such as yourself. Okay, that's really

useful. We will include, of course, your contact details in the show notes so

people can make contact with you directly or via ourselves if they have

any questions. Thank you. This was a very interesting

chat and there's loads more we could talk about. Thank you very much for your

time. I really enjoyed chatting with you Charles. Thank you for the opportunity.

I hope I haven't bombarded you with too much

information. Not at all, but just make me want to go to Cyprus.

You're welcomed anytime. Please let me know

when when you're planning on visiting. It'll be my absolute pleasure to

welcome you here. Thank you so much Charles. Have a great afternoon. Thank you Stephanie.

Take care. Thanks for listening to tax

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