Cyprus has a value added tax which is at 19%. The tax rate makes some luxury items a bit more expensive than they might be otherwise, but these items will still be substantially cheaper than in the European mainland.
The value-added tax levies at 9% for food, hotels, and other tourist goods. Likewise, rent and financial services are exempt from the value-added tax.
You will have to pay the value added tax for any property purchases that you make in Cyprus, however. You can apply for an exemption for the highest value-added tax rate while purchasing property to reduce the tax by as much as 66%. You will need a Cypriot lawyer to walk you through the application process for this tax benefit during the time of your property purchase in the country.
There are also a few other property related taxes in Cyprus. The first is the property transfer tax, which levies at the point of sale. The property transfer tax is sometimes as much as 20%, depending on the scale of the purchase. There is also an annual property tax in Cyprus.
The annual property tax is levied at a small percentage of a property’s assessed value each year. For the most expensive properties, this tax will be as much as 5%, but for most properties, the tax rate is much lower.
There’s no inheritance tax in Cyprus, which makes it an ideal place to retire and ensure that the family nest egg remains secure. There is also no wealth tax, which, while uncommon, is becoming increasingly a factor in deciding to emigrate within the EU.
Keeping your money in Cypriot banks is safe, provided that the country does not undergo another credit crunch like in 2009. Notably, nearly every other country in the developed world underwent the same credit crunch in that period, so if there’s another, it’s highly likely that Cyprus will do no worse than anywhere else you might consider saving your money.
Just remember that there is a tax on the interest from bank deposits in Cyprus. The deposit tax shouldn’t amount to much for most people, but it’s worth remembering if you are using Cyprus as a tax shelter for large sums of cash.
It’s probably better to invest in a Cypriot property even though they’re taxed at a higher rate because the Cypriot government only guarantees deposits up to 100,000 euros.
Cypriots eager to pay less tax can take advantage of the country’s tax deduction program, which also extends to corporations who are headquartered or who have operations there.