I’m heading off to Cyprus on the 6th of May – a week from Sunday. It’s going to be a very quick and very busy visit. While I’m there is there anything I can do for you? Any questions that you have that perhaps I can find answers to? Just send me an eMail and I’ll see what I can do.

I have two HUGE announcements:

1. With the help of my awesome co-worker, Olga, we’ve been able to re-launch the Cyprus Buying Guide website. It now looks MUCH – and I mean MUCH better. We’ve added new information, more reviews on helpful services, a newsletter archive (so you can read past editions) and thankfully Olga managed to get the Cyprus Buying Guide Community FORUM up and running. The forum has been down for a couple weeks due to a move from one hosting company to another.

Please look at the guide and let me know what you think – also, if you spot typo’s please let me know. I can’t spell to save my life! The site is located at:

http://www.CyprusBuyingGuide.com

2. I’ve revamped the actual 120 page Cyprus Buying Guide. After spending 2 years of on-going visits, learning tonnes about the property buying process AND doing it myself, I’ve gone through the Cyprus Buying Guide and re-written it. It now holds more information, a clearer step-by-step process, top tips and ways to ensure you get what you want, when you want it, how you want it.

Cyprus is rife with dodgy developers and agents – make sure you protect yourself by reading the Cyprus Buying Guide. I promise you, if you don’t learn loads from it and are not able to make better decisions when buying in Cyprus, I will give you a full refund. Hundreds of people that have purchased the guide testify to the fact that it really does help save money and avoid major risks.

As one CBG reader, Dave Keightley, wrote “Great value for money. Covers everything you need to know about moving to Cyprus. Certain items could save £££”

Please get the guide at: http://www.CyprusBuyingGuide.com/guide.htm

Okay…This newsletter is JAM-PACKED with some good stuff…

Have a GREAT weekend and please let me know if you need anything from Cyprus.

Kind regards & Big Smiles,

Kim Brown
Cyprus Buying Guide
The Overseas Guides Company Ltd

Mail me at: Kim@OverseasGuidesCompany.com

The Financial Implications of Relocating to Cyprus

By my friend, Antony Howard BA (Hons) cert PFS

Cyprus, with its Mediterranean climate and relatively benign tax regime has long been a popular retirement destination for the citizens of the colder and more highly taxed countries of north west Europe - especially the United Kingdom. With a change of residence however comes the need to review financial arrangements, particularly taxation and inheritance issues.

The new arrival becomes tax resident in Cyprus after living in the Island for 183 days in a tax year. The tax year is the calendar year. Residence brings with it liability to income tax and to the special contribution for defence. The other main taxes are the immovable property tax and the capital gains tax.

One of the biggest attractions is that if you become a resident in Cyprus for tax purposes you pay just 5%, after the first 2,000 Cyprus pounds – making it one of the friendliest tax regimes in the whole of Europe. However there is an annual tax for properties valued over 100,000 CYP, which ranges from 2.5% to 4%.

It will also be beneficial for those retiring to Cyprus to have their pensions paid into a Cypriot account and therefore only have their pension taxed at a 5% rate instead of the higher potential rates within the UK. A double taxation agreement with the UK is in place which means that your pensions are not taxed in the UK too, so this can mean hundreds of pounds in saved taxation.
Example:

Male age 65, in receipt of £20,000 pensionable income.
Taxation in the UK £2,471
Taxation in Cyprus £900
Tax savings £1,571

However delightful it may be as a place to live, there are limited investment opportunities in Cyprus and the new resident will probably continue to hold investments, property and perhaps a business in the U.K. He may already have moved his banking accounts to the Isle of Man, Jersey or Guernsey. One of the consequences of continuing to hold assets in the U.K. will be an ongoing liability to income tax there.

With the adoption of the European Savings Tax Directive, interest received on the offshore banking accounts may also be taxed at a rate of 15%, and this will rise to 20% in 2008 and 35% in 2011. Depending on the nature of the income, relief may or may not be available against the corresponding Cyprus taxes and in most cases the end result is likely to be that tax is paid at the higher of the two rates.

However there are ways round this issue and offshore investment accounts can be set up, that do not adopt the European Savings Tax Directive and will grow free of taxation. It is paramount that you receive advice on these issues.

A further concern is the tangle your finances can get in. You may have to run bank accounts both back home and in Cyprus. And the tax authorities of both these countries may be chasing you for there a fiscal cut of your income. It’s important to make sure you are officially recognised as non-resident in the UK and to place your money outside the reach of the taxman.

Once you have established yourself as a non resident it will be sensible to move your money to a place where it will not face automatic deduction of income tax on any interest you earn. And this is where many expatriates turn to offshore banking. This may conjure up ideas of tax evasion or money laundering, but it is a sensible option for the expat to consider so that he or she does not pay unnecessary tax. Offshore really just means “outside the scope of a particular country’s tax system.

Assets left behind in the U.K. will attract a charge to inheritance tax there on death, or on the death of the survivor if they are left to a surviving spouse. This tax is at the rate of 40% on the aggregate value of assets exceeding £285,000 sterling (increasing over four years to £325,000). If there are assets outside the U.K., for example the offshore banking accounts, they are still vulnerable to this tax. How, you may ask? In two ways: firstly, the executor of the U.K. estate is required to investigate and file a sworn declaration of assets and secondly the tax can, to the extent of the U.K. assets, be collected from the executor there. It can also be collected from any person in the U.K. who benefits from the estate at a later date.

Moving on to matters of inheritance, whilst tax may be the most pressing immediate issue it is also necessary to consider what happens on death. The new resident will probably, if he makes Cyprus his permanent home and breaks his ties with the United Kingdom, eventually become domiciled in Cyprus. It may be important that he does so because it is only by acquiring a domicile elsewhere that his assets outside the United Kingdom cease to be potentially liable to inheritance tax.
If the deceased was domiciled in Cyprus, there is no Estate Duty payable. If the deceased was a tax resident in Cyprus, there is no Estate Duty on the Cypriot property or any other property owned by the deceased in any other country.

The downside of becoming domiciled in Cyprus is that Cyprus succession law may apply on death. This restricts the ability to dispose of assets freely by will and sets out rules for the distribution of at least part of the estate. The rules are complex and vary according to whether there is a surviving spouse or children and they can result in an unexpected inheritance for a more remote relative.

As with tax however, proper structuring, undertaken with the benefit of expert advice, can mitigate the impact of the succession laws. Such arrangements will be tailored to the individual circumstances and usually involve the use of trusts and companies established in zero or low tax centres.

It is important that advice and strategy planning is made when moving to Cyprus. Should you have offshore accounts? Where should pensions be paid to? What are the Inheritance tax issues? Without advice prior to a move, you may not be making the most of the tax situation and not be receiving the levels of interest you could be….

<The End>

Note: I’m having lunch with Antony next week – he’s an Independent Financial Advisor. His knowledge about anything to do with finance, including finance concerning Cyprus, is absolutely amazing. Anyway – I use to think that IFA’s were only for rich people – but that is so untrue. If you are going to buy in Cyprus and any of the issues above have tweaked your interest either eMail me with your contact details or fill out my resource form and I’ll have Antony contact you.
My resource form is located at: http://www.CyprusBuyingGuide.com/resources.htm

How’s the Cypriot Pound? By Smart Currency’s Charles Purdy

Cypriot £ vs Sterling

The Cypriot £/sterling rate has hovered around 0.85 (plus) inter bank for the last week or so. The Euro land economy [the Cypriot £ is tied to the Euro] is moving forward. Germany is the mainstay as it has finally got to grips with entering the Euro at too high a rate. Given the size of the German economy, where it goes the rest of Euro land, including Cyprus, tends to follow. Inflation in the UK has breached the 3% level and the Bank of England was forced to write a letter to the Chancellor, that 'friend to all ' , Gordon Brown. As a result the market is bullish on more than one interest rate increase of 0.25% happening before a peak in UK interest rates is reached. Likely to hover around current levels until we see what the European central Bank and the Bank of England do with interest rates.

It's a good time to consider purchasing or reserving Cypriot Pounds for the future - or at the very least discussing it with a currency specialist. To get a Better-than-Bank Cypriot Pound Exchange Rate Quotation, please go to: http://www.smartCurrencyExchange.com/smartsquotation.htm
or call Carl on 08081 630 102 freephone.

BIG HUGE NOTE – CHECK OUT THIS FEEDBACK ON SMART THAT I RECEIVED ON SUNDAY – 22/April/2007

“Kim

Thank you for the thought and forwarding the links to the Smart website. I needed to move monies from the UK to Cyprus last week and after previously seeing the recommendation for Smart on your website I visited their website and had already downloaded the information sheets. The information is extremely good in straight forward English, if I had had this information back in January I would have been a lot more street wise and probably saved a few GBP’s. The currency watch they offer sent to your PC weekly is also a very good facility to assist keeping in touch with currency movement.

The proof is in the pudding as they say; you may be interested in the result of my transaction. I also have accounts with MoneyCorp and HiFx and my local bank is the Halifax.

This was to move CYP 90,683.30 over to Cyprus to 5 different recipients

Halifax Bank 0.813 GBP 111,541.57 GBP 111,541.57

HiFx 0.841 GBP 107,815.12

MoneyCorp 0.843 GBP 107,602.12

Smart 0.849 GBP 106,811.00 GBP 106,811.00

Difference (max) GBP 4,730.57

Without visiting your website and the deal Smart offered at the very least I would have transacted with MoneyCorp and paid an additional GBP 791.00. So that’s a big thanks to you and Smart from me. I also found Smart very friendly and professional in the way they do business. I have already recommended them to some friends who are also purchasing in Cyprus and I was horrified to find out that they had made a first stage payment through the high street bank. I will be giving Charles of Smart positive feedback next week as to his company…

Thanks again for the assistance to date.

Kind regards

Martin"

To get your Better-than-Bank Cypriot Pound Exchange Rate get a quote at: http://www.smartCurrencyExchange.com/smartsquotation.htm
or call Carl on 08081 630 102 freephone.

Buyers Beware – Story from a Cyprus Property Buyer

“Hello Kim,

I'm looking forward to receiving a copy of your newsletter and I'm sure there will be a lot of useful info in it.

I bought a property in the village near a well known town/city in 2005 in order to move out there with my wife and son. I took early retirement to do so and my wife, a schoolteacher had secured a post at a primary school.

The property we bought was about one third completed at the time we put down the deposit with the developer. The house was part of a complex of 32. According to all the advertising information, the houses were to be built of the very best and enduring materials by the most professional craftsmen. This was the case until the house was ready for the final finish and at this point the developer sacked the builders and employed his own, low paid and unskilled labour. The result was that the finish was very poor and I had to do a lot of remedial work myself. Although the complex is now complete, only 7 or 8 properties have been sold as result.

We have a contract with the developer which includes financial penalties for late completion which are payable monthly and although there was a six month delay, the developer has told me that if I want any money back from him, I would have to sue him. I have since discovered that my solicitor also acts for him!

Because he refuses to pay me the C£1800 he owes me for delay, I have refused to pay him C£900 as an extra for installing air conditioning and because of this he has threatened to break into my property to retrieve the said air conditioning. I thwarted this move by reporting the matter to the local police who have "had words" with him in that respect.

The house itself is in quite reasonable condition and although we decided not to stay in Cyprus and have since returned to the UK, we have used it on a couple of occasions as a holiday base but our property remains the only one on the complex without gates or a car port awning, this is because of the developer's pettiness and greed.

We are strongly of the opinion that developers in Cyprus are a mixed bag and that there is a notable element of risk involved in buying property no matter how well known the developer is. If there were an equation in existence to be able to ascertain the honesty and professionalism of Cyprus developers then I would advise people to use it so as to save an awful lot of heartache and in many cases the end of a dream.

Best wishes, Mr. F and Family”

NOTE: There are many things to take from this story. However the one I want to highlight is that it is VERY important that you MAKE SURE to get a solicitor INDEPENDENT from the developer.

Cyprus Buying Guide Forum

Please check out the forum at: http://www.overseasguidescompany.com/phpBB2/index.php?c=3

You’ll find stories from buyers, reviews, questions and all sorts of feedback. It’s a community for you to voice your concerns, offer your enthusiasm and hopefully get information that will make your journey easier!

Please go to: http://www.overseasguidescompany.com/phpBB2/index.php?c=3