How are you doing this month?

I’ve been very busy. Since returning from my trip to Cyprus last month, I’ve been working hard, enjoying the sun (when it comes out) and spending quite a bit of time with friends/co-workers. Talking of that, we all recently set off on a chocolate making workshop here in London!!

Anyway – other than making chocolate, I’ve also been planning my holiday to the States in a couple weeks. For the 4th of July, I’ll be back home visiting with my friends and family. Although I’ve lived in the UK for eleven years and I never plan on moving back to the States, I do enjoy seeing everyone. Each time I go home, however, for the first 3 days I think to myself, ‘I miss New York – I want to move back!’ And then, around day 4, I realise why I left in the first place and by the time I leave I’m happy to get back to the UK.

And I’m also going to be booking my next trip to Cyprus. I’m heading out around the 20th of August and I’ll be there for about 5 days. I usually stay away from Cyprus during the summer months as I really don’t like how hot it gets…but I have some business to do, so I’ll be there. Speaking about temperatures, I just spoke to a friend in Paphos and he said that it’s around 35 degrees right now!

So…what’s in the news in Cyprus? The water shortage continues - bad timing for the Kataklysmos Flood Festival which started last week. This festival coincides with the Christian feast of Pentecost and aside from parades, fireworks, and music, people celebrate by throwing water at each other. I’m sure that everyone will still have fun – even if there is a lack of water!

Otherwise, the big topic of discussion for Brits is the terrible exchange rate from GBP to Euro. Imagine living happily in 2007 knowing that your pension provides X amount and then moving into 2008 and finding your pension has decreased by 15% because of exchange rates. This is a big issue and must be considered by people that will live off of overseas pensions. See more on this below.

I’ve also read that a consortium headed up by the Leptos Group has won the bid to build the new Paphos Marina. The project is said to cost over €70million to build and includes a substantial residential component, leisure facilities and a 1,000 boat capacity.

The marina is going to be built in the Potima area of Paphos. Apparently, conditions of the contract state that work must begin on the project immediately with completion due in three years. I always find it hopeful when a date is announced, but I never believe anything until I actually see work commence. A contact in Paphos told me that Aristo is contending the whole situation, so I wonder if that will delay the start date? Every time one consortium wins a bid, it's customary for the runner-up to fight it. (That's Cyprus for you!)

And finally, Cyprus is in trouble for illegally killing over 1.1 million little birdies. I’m not sure if you’ve heard about this delicacy as it’s quite popular all through the Mediterranean. The Cypriots love this dish – basically, it’s baby birds that don’t have feathers yet. They are caught in nets or on sticky paper and boiled. When you get the dish, you have 6 to a dozen and they come complete. To eat them, you need to cut their head off, and also remove their stomach with a small incision. The birds taste like a mixture of chicken and chicken fat with chewable bones.

Not nice – eh? Well, they’ve been illegal since Cyprus joined the Euro on 2004, however you can still order them anywhere if you’re a local.

Let’s get onto the rest of the newsletter! This month, I have some excellent information that I’m going to put in the new version of the Cyprus Buying Guide. Jackie, our woman in Cyprus, wrote 6 pages on tax in Cyprus and she wrote it in a way that anyone can understand. For the first time, I actually enjoyed reading this information so I hope you’ll gain from it to. This month, I’ll include the first 3 pages and next month you’ll get the rest.

I’ve also included an update on the Euro rates and details about Smart’s presentation in Cyprus on ‘Pension in Sterling, Paying in Euros.’ In the legal section I’ve written an article called, ‘Is it possible to find an Independent Solicitor in Cyprus.’ There is a new development I’ve highlighted that is for investors…and I’ve got some information on planning your finances.

As always, I love to hear back from you…so please send me your thoughts, questions, comments, ideas.

Have a great month!

Kim

Cyprus Buying Guide
The Overseas Guides Company
Kim@CyprusBuyingGuide.com

Is it possible to find an ‘Independent’ solicitor in Cyprus?

When buying a property in Cyprus you’ll want to make sure that the contract of sale protects you, your money and your future property. Stating this, it’s an absolute necessity to ensure you acquire an independent and legally registered solicitor. Doing this is not as easy as one would think!

Upon deciding on a property, it’s quite common for the developer or estate agent to take you to a solicitor that will handle the legal aspects of the purchase. When you are taken to a solicitor it’s often the same solicitor that represents the property company or one of a few that the agents send all their clients to.

Quite clearly, going to the solicitor that works for the property company is a serious conflict of interest. In the UK, you would never buy a property from Barratt Homes and then ask their solicitor to draw up your contract – would you? No – you would get your own solicitor to ensure that the correct searches are completed, the contract protects you and the whole process is legally compliant.

Alternative, going to an ‘independent’ solicitor that the agent works with also causes issues. If your agent brings you, along with many other buyers, to lawyer A or lawyer B for all the property sales, there is a very high possibility that the lawyers will become beholden to the agent to ensure future business.

Sadly, in Cyprus it’s illegal for solicitors to advertise their services thus they rely heavily on word-of-mouth and property agent recommendations. Due to the fact that there are quite a few lawyers, many agents choose to work with the ones that make sure the sale goes through ‘easily’ and works to the benefit of the agent or developer.

Unfortunately, neither situation is good for the property buyer.

And what makes matters worse is that Cyprus is quite a small place. If you choose to find a solicitor on your own, chances are they’re affiliated to your developer or agent anyway! Some ex-pat organisations have recommended that Brits choose a solicitor outside the area of purchase. By doing so, you’ll have more chances that your legal representative will do the right thing rather than bow to the needs and pressure of local developers.

Additionally, my suggestion would be to realise that you have the right to get your solicitor to insert any clause that you deem reasonable. In the UK, it is standard practice for your solicitor to work for your protection, but in Cyprus, if you don’t ask, you don’t get. The developer/agent may or may not be happy with your requests, but it is your right to ask for what you want. Consider asking for the following:

• Protection against late delivery – ensure that there is a hefty penalty charge for every month the property is late
• Make sure that you get your money back immediately if there is a situation where building permission is not granted
• Ask for freedom to sell the property at any time
• Dictate that the developer must insure the property against fire, earthquake and any foreseeable risk during the build
• Request that there is a maximum fee for cancellation agreements (currently developers charge whatever they want)
• Make sure that stage payments are linked to percentages of completion and are verified by a professional surveyor or architect not set to arbitrary dates.

To conclude, there is no foolproof way to find an ‘independent’ solicitor in Cyprus, however I truly believe that there are actions you can take to protect yourself. Never believe anything anyone says – do your own homework and your own fact-finding. Just because lawyers in the UK have a high level of standards and ethics, don’t assume that it’s the same in Cyprus.

If you would like me to introduce you to my recommended Solicitor, please go to: http://www.CyprusBuyingGuide.com/resources.htm

Stop your pension from decreasing!

by Smart Currency’s Charles Purdy.

Why are ex pats living in such places as Cyprus, Greece, Italy and France feeling worse off?

SIMPLE…the € has devalued by 15% over the last year. Now, when an ex-pat receives their pension from the UK, they are getting 15% less in €’s compared to this time last year. Also, we have to remember that inflation is on the increase, especially energy and food costs, which means that budgets are being stretched even further. Not a happy picture.

Say you are receiving £1,000 per month as a pension payment. If you had put a forward contract in place this time last year you may well have secured an exchange rate of €1.43/£1. This would mean that you would receive €1,430 per month. The average exchange rate over the last 12 months was probably closer to €1.30. This means that if you had exchanged your pension each month, over the course of the year you would have received €1,500 less. The cost of a new lounge suite!

How can future pain be avoided? Again the answer is SIMPLE. By using a company such as Smart Currency Exchange you can secure an exchange rate for those future pension payments by using what is called a “forward contract”. This may sound complicated but it is really very straightforward and it will ensure that you know exactly what you will receive each month making budgeting much easier. Also you will save significant transfer costs when compared to your bank which, over the course of a year, could save you another €500 plus…

Sound good? Then the next step is to have a SIMPLE discussion with Smart Currency Exchange to see if we can help you.

To read the latest on Currency go to: http://www.CyprusBuyingGuide.com/Currency260608.htm

Smart Currency Exchange also helps people living in Cyprus to get an excellent exchange rate for regular payments such as pensions. In order to secure a set rate and know exactly how much you’re going to get each month, give Smart a call on 0808 163 0102.

Also - Smart is currently presenting in Cyprus on how to set up Smart Pension Payments and save. If you’re in Cyprus now or if you’re interested in having a Smart representative speak at an event you’re holding, please email Martin on: mailto:Martin@SmartCurrencyCyprus.com

And if you haven't done so yet, get your report...

"Why overseas property buyers lose money...
...and how you can avoid it!"

This 10-page educational report outlines:

• Case Study: When Property Buyer, Mr Reed, Purchased an Overseas Property, he Made Three Mistakes that Cost Him £10,256...learn how you can avoid them...
  
  
• How the Banks make HUGE profits from their long-standing unsuspecting customers
  
  
• Ways to safeguard yourself against adverse fluctuations in exchange rates (or in other words, helping you to keep your money in your pocket)
  
  
• The entire process of moving money from the UK to any overseas location, so that you're armed with all the knowledge you need to make intelligent decisions about your money
  
  
• How you can ultimately save £100’s and £1000’s so that you have ample money to buy furniture and white goods…
  
  
• More case studies of people that lost money due to foreign currency strengthening against the pound, so that you learn from other peoples mistakes rather than your own!
  

And just a couple remarks about the report from Smart readers...

"We have found your free report to be extremely helpful... Wendy Watson"

"I have read and absorbed the information in the stories outlining the mistakes which the uninitiated can make when transferring currency. It is very illuminating and essential that any one,like myself, who is in the process of buying an overseas property should be aware of. I would go so far as to say that every agent selling overseas properties should be compelled to advise their prospective purchasers that it is paramount that they use a currency expert such as yourselves. Regards, Eric Thomas"

To get a copy of the report at no charge go to: http://www.smartcurrencyexchange.com/freereport.htm

To get a Better-than-Bank rate go to: http://www.smartCurrencyExchange.com/smartsquotation.htm
or call Carl on 08081 630 102 freephone.

What is the full tax situation in Cyprus?
by OGC's Jackie Nicholls

Let’s start with Income Tax – not a favourite subject! However, for most of us this subject is good news when emigrating to Cyprus. Here are some of the most frequently asked questions on this topic:

1. If I move to Cyprus permanently, what do I do about Income Tax/other taxes?

The first thing to do is complete a Form P85 and submit this to your local Tax Office. This will de-register you from UK tax.

It’s best to do this before you leave as these things take time and if there any queries, it is much easier to pop to your local Tax Office in the UK and sort them out while you are still there.

How do I get this form? You can either telephone your Tax Office and they will send you Form P85 to complete, or, you can print one off yourself by going to their website which is http://www.hmrc.gov.uk. By the way, The Inland Revenue, and Customs and Excise are now known as HMRC (Her Majesty’s Revenue and Customs). I will refer to the “Tax Office” or “Inland Revenue” as HMRC from now on.

Also, if you are receiving a pension, in order to receive your payments gross (without any tax being deducted), you will need to complete a DT/Individual Form once you arrive here in Cyprus. If you want to deal with your tax affairs yourself, you obtain this form from your local Cypriot Tax Office. Once they have all the information they need, they authorise it and submit it to HMRC UK, who in turn will eventually inform your pension provider to pay your pension gross.

You need to allow at least 6-9 months, sometimes as long as a year for all this to be sorted out. But don’t worry; you will receive a refund from HMRC UK eventually!

And of course, don’t forget, if you prefer not to deal with the Cypriot Tax Office yourself, you can always go to a local English or Cypriot Accountant who will deal with everything for you for a fee. It’s often worth going this route, the cost is probably about the same as the UK - but you have no hassle!

The good news is that once all your paperwork has been approved, all pension payments received (as long as you continue to spend 183 days a year on the island) will have no tax deducted from the UK.

So what happens about other taxes? Read on!

2. How long do I need to live in Cyprus before I pay Tax there?

Once you have spent more than 183 days in Cyprus in any Cyprus tax year you will be classed as “tax resident” – in other words, you will pay all your taxes here on your income instead of the UK. The 183 days do not need to run consecutively in order to qualify.

For your information:

• Tax Residents (those who live in Cyprus over 183 days in any Cyprus tax year) are liable to tax on their worldwide income, in other words, every penny you earn both inside and outside of Cyprus. This includes any interest payments.
• Non Tax Residents are liable to tax only on income earned within Cyprus.

3. When does the Cyprus Tax Year run from?

It runs from 1 January to 31 December each year.

4. What are the Income Tax Rates?

On your “chargeable income”, in other words after all your allowances have been given, the rates are as follows for 2008:

Standard Rates
€0-19,500 No tax to pay
€19,501-28,000 Euros 20% tax to pay
€28,001-36,300 Euros 25% tax to pay

5. How much tax do I pay on my pension?

If you are receiving a pension in Cyprus, you have a choice of two taxation systems.

Your pension can either be taxed at Standard Income Tax Rates as shown above; in other words with the first €19,500 tax free – or – it can be taxed at 5% after the first €3,420.

So what does this mean?

In simple terms, if your total income is less than €19,500 per year you are better off choosing the standard rate option as shown above – which means you pay no Income Tax.

If your income is more than €19,500 a year, then you are better off choosing the 5% option. Let’s see why in the following examples:

Based on an income of €25,000:

Option 1: You choose the Standard Tax Rates as shown above:
Your total income is €25,000
Your Income Tax is deducted at 20% standard rate = €5,000

So if you choose this option, on your income of €25,000
you would pay €5,000 Income Tax

BUT…. And here’s where the good news is!

If you opt for the special taxation rate look what happens to your €25,000 income:

Based on an income of €25,000:

Option 2: You choose the Special Taxation Rate
Your tax-free income would be €3,420
Your taxable income would then be:
€25,000 minus €3,420 = €21,580 x 5% = €1,079

So if you choose this option, on your income of €25,000
you would only pay €1,079 Income Tax

The Verdict:

So, on an income of €25,000 here’s your choice:

If you choose to pay at standard rates your Income Tax Bill will be €5,000
If you choose to pay at special taxation rates your Income Tax Bill will be €1,079

By opting for the special taxation rates, you will save a whopping €3,921 in Income Tax!

I know what my choice would be!

6. Are there any other taxes I need to pay?

Yes there are.

Your income from investments is not subject to Income Tax, but instead to another form of tax, known as “Defence Contributions”.

Defence Contributions are deducted at 10% on any bank interest you receive. If you have a bank account in Cyprus, this tax is automatically deducted and shows on your bank statement - but you still need to declare it.

If you are receiving interest gross from the UK, you must also declare this in Cyprus.

The good news is that if your total income from all sources is less than €11,970 then you will be charged Defence Contributions at only 3% instead of 10%. Which is great for those of you who are on small pensions.

In addition to this, you should also bear in mind that if you receive Dividend or Trust Income this is taxed at the rate of 15%.

If you are in receipt of rental income, unfortunately this gets hit twice. Once for Income Tax at the normal scale rates on the net income received. You then also have to pay Defence Contributions at 3% on 75% of the gross income. (So bear these additional costs in mind if you are renting out a property).

***

Next month, I’ll provide you with more on tax from Jackie. Jackie lives in Cyprus and is a pillar of knowlege. Anyway, If you’d like to talk to someone about taxes, give me a shout as I’ve got some good contacts.

Kim@CyprusBuyingGuide.com

Sorting your finances out...

Dealing with your money sometimes seems like an impossible uphill struggle and yet we would suggest that it has never been so important for a variety of reasons.

Currently it is all over the media that we are in the middle of a credit crunch, that there is dented confidence in the UK property market and doubts that people have sufficient retirement planning. We find this leaves people very confused as to how they can improve their current situation and plan for a stronger future, which is why they turn to Independent Financial Advisor’s.

Many people will first turn to friends or family members for advice but not many of these people are qualified financial experts. Another option is to use your own bank; they obviously have a limited supply of their own products and have the brand power that doesn’t necessitate the need to develop highly competitive products.

The main alternative in the modern era has been to use the internet for research. The web is a very valuable tool with the potential for millions of applications. However this can also be its downfall, in that it is a reactive database. It will only respond to your range of knowledge and subsequent questions. Furthermore, the cheapest product will normally be at the top of the list – and as we all know from experience, the cheapest is rarely the best!

In our experience there are two main factors involved for people who are serious about sorting their money out.

1. Relationship

In an ideal world we believe the best financial advice comes through building a trusted relationship with an expert. Over the course of time, the better your financial adviser knows you the more spot-on the advice will be. They will truly understand what your financial goals and needs are and offer a consistent, educational approach, allowing you to make better choices.

2. Niche Expertise

Obviously in each area of your finances it is vital to have an independent specialist whether you are interested in savings, tax advice, property, legal affairs or alternative investments. It is reassuring to know that the advice you are getting is from a dedicated and qualified professional.

I have an IFA that I recommend who offers the best of both worlds. Each of their clients has a committed consultant whose role it is to orchestrate a team of experts, creating a bespoke solution for your money, regardless of your current financial situation. And they work with every-day normal people like us...they're not set out to simply help the rich folk.

During a recent conversation with my IFA I found out that 99% of the population (in the UK) had a drop in their salary by 50% or over when they retired. I also discovered that the average pensioner is living on a total of £256/month. Further, another friend in the financial field told me that too many people think that they can sell their property in the UK, buy a house overseas and have enough money to live off of...in most cases this is not the case.

It's soooooooooooooooooooo important to consider your finances and your future. Make plans to ensure you're enjoying life overseas rather than having to pinch your pennies.

Give me a shout if you'd like to discuss your situation with an expert and find out various options. And don't worry - my contacts are down-to-Earth great people that seriously want to help. Yes, they get paid for what they do, but the amount you pay will be well worth the potential future gains you'll make. And it doesn't cost anything to at the very least, explore your options - does it?

Please contact email me with your phone number and best time to contact you and I'll have one of my contacts get in touch: mailto:Kim@OverseasGuidesCompany.com
Phone 0845 017 8771/ 0207 898 0549

Property of the Month - Purple Greens

This month’s development that I’d like to highlight is called Purple Greens. It is located in a quiet residential area of Tersefanou village, within easy walking distance of the village centre and the local amenities. It practically borders the entrance to the Golf Club at the soon to be constructed 18-hole championship Golf Course. Despite various rumours, I am told that the Course will be breaking ground by the end August this year. The apartments on this development will be built with a delivery date for March 2011, in line with the Course’s delivery and grand opening. This project has a guarantee of 2 years rental income on all apartments on the development.

Purple Greens will comprise of only 28 ultra-luxury 2-bed apartments.

Key features:

• High-quality apartments in 2 very small exclusive buildings
• Large communal pool
• Landscaped gardens
• Full A/C (hot and cold split-units)
• Silver kitchen goods: fridge/freezer, oven, hob, extractor
• Granite worktops
• Marble floors in communal areas
• Covered parking
• Fully-furnished
• 2 years rental guarantee

Financials:

Financing is available at 30% deposit and 70% LTV mortgages. The deposit can be split into 20% immediately and the remainder upon completion. Alternatively, based on the property’s value upon delivery, the client may choose to remortgage the remaining 10% then.

Return on Investment:

This investment has been designed with a medium to long-term strategy in mind in order to maximize the investment.

Area factors which affect positively the investment potential on the property are:

• The Golf Resort that is under-construction in the village of Tersefanou. All the licenses and permits have now been obtained for the resort and the developers have already started construction. Rumours circulating around the resort over the last 2 years have influenced investment in the area meaning prices have increased drastically on land and property in the area. As the resort proceeds with construction, further large increases are expected.
• Terminal 2 of Larnaca airport, currently under-construction. Progress is on schedule with the construction of terminal 2 of Larnaca’s busy International Airport. Expected completion in 2009 will see major low-cost airlines such as Easy Jet and Ryan Air fly to Larnaca Airport – a 15 minute drive from Kiti.
• Larnaca Marina. Set to rival Dubai in its high standards of architecture and construction, the new marina is just one of the exciting projects surrounding Larnaca right now. Still at planning phase, but having been given the green light, this project will add prestige, tourism and further investment into this growing town.

Rental Income:

The agents that work with the us always hand-pick their projects to make sure clients obtain the best in terms of return-on-investment both at the exit-point, as well as during the years that they own the property.

For this specific project, the agent is so confident in its rental potential that there is an option for clients to sign a 2-year rental contract with the agent at 5% of the net purchase price!

If you’re interested in hearing more about this development or any developments in Cyprus, please email me at mailto:Kim@CyprusBuyingGuide.com or fill out our property form at:
http://www.cyprusbuyingguide.com/requirementsform.htm

Some nice words from a CBG reader...

Before I go I wanted to share with you a very nice piece of feedback we received recently:

'Hi Kim. Thanks for the email. I'm so glad that you've found a true purpose in life. The info that you've sent me has been absolutely invaluable. So far as to say that when I actually visited Cyprus I had YOUR buying guide amongst other info of yours in my hands when i got off the plane. When I did the business. It was YOUR guideline track I followed (to the letter in some instances) that reassured me I was doing everything I could to protect myself. For that, I can't thank you enough. Thank you, Thank you, and Thank you.'

Mark Welch

Furthermore, I've just uploaded my newest Cyprus Buying Guide version - it's completely up to date, so get your copy now! www.CyprusBuyingGuide.com/guide.htm

Have a great month and I truly hope that you find value in these newsletters and the other emails I send out. If there is anything I can do to assist you further, give me or one of my associates a call on 0207 898 0549…

Kim

Cyprus Buying Guide
The Overseas Guides Company Limited.
mailto:Kim@CyprusBuyingGuide.com