The revised UK and Cyprus Double Taxation Convention could lead to higher taxes for some retired British residents in Cyprus whose pensions are paid by the UK government.
The new convention will come into force as soon as it has been ratified by both countries and will replace the current agreement, which was signed in June 1974. Under the 1974 agreement, the income received by UK nationals resident in Cyprus from their UK pensions and annuities is taxed by the Cypriot authorities and, therefore, exempt from UK tax.
But changes made to the 2018 convention in order to conform to the OECD Model Convention mean that, henceforth, those in receipt of pensions paid by the UK government, local authorities and ‘political sub-divisions’ will be taxed on the income they receive from those pensions by Her Majesty’s Revenue & Customs in the UK.
According to the Cyprus Property News, this change will have an impact on pensions received by retired UK civil servants, armed forces personnel, National Health Service staff, teachers, local government employees, police and others. In some cases, the change will mean they pay tax neither in Cyprus nor the UK as their income falls below the tax thresholds in both countries.
Others will pay about the same. But some people with large pensions and those with UK government pensions and other income that is taxed in the UK - for example, from UK property rental - will pay more tax.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
The revised UK and Cyprus Double Taxation Convention could lead to higher taxes for some retired British residents in Cyprus whose pensions are paid by the UK government.
The new convention will come into force as soon as it has been ratified by both countries and will replace the current agreement, which was signed in June 1974. Under the 1974 agreement, the income received by UK nationals resident in Cyprus from their UK pensions and annuities is taxed by the Cypriot authorities and, therefore, exempt from UK tax.
But changes made to the 2018 convention in order to conform to the OECD Model Convention mean that, henceforth, those in receipt of pensions paid by the UK government, local authorities and ‘political sub-divisions’ will be taxed on the income they receive from those pensions by Her Majesty’s Revenue & Customs in the UK.
According to the Cyprus Property News, this change will have an impact on pensions received by retired UK civil servants, armed forces personnel, National Health Service staff, teachers, local government employees, police and others. In some cases, the change will mean they pay tax neither in Cyprus nor the UK as their income falls below the tax thresholds in both countries.
Others will pay about the same. But some people with large pensions and those with UK government pensions and other income that is taxed in the UK - for example, from UK property rental - will pay more tax.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
