Q1. I came to Cyprus on 10 January 2019 to live here and am a pensioner. What do I need to do from a tax point of view in order to exempt my pension income from UK tax and have it taxed in Cyprus?
A1. Hi Richard. First of all, I hope you enjoy your stay in Cyprus. You need to go through Immigration procedures within 4 months of arrival and obtain your registration certificate. As you will be here for more than 183 days in the calendar year you will be resident here and therefore will need to register with the Cypriot tax office. There are forms to complete including DT/Individual form. This form will need to have €80 of stamps. The tax office will authorise the DT/Individual form and submit it to the UK Inland revenue who in turn will eventually inform the pension payer to pay the pension gross. The pension will be reportable on your Cyprus tax return and you will pay tax here at a much-reduced rate. You may also need to complete a form P85 and submit it to your UK Tax office.. As you will continue to pay tax in the UK on your pension for the period from 10 January 2019 to the date the UK revenue informs the pension payer to pay the pension gross you will be due a UK tax refund for that period. Clearly Read can help you to complete all the forms and obtain the correct amount of refunds for you.
Q2. Is there any tax relief on entertaining expenses in Cyprus?
A2. Hi Sue, Entertaining expenses are treated as a business expense up to 1% of the turnover but to a maximum of €17086. Entertainment includes hospitality of any kind, such as cost of annual dinner parties of staff, clients, customers, office drinks and food, theatre tickets, provision of sports facilities to staff, made in connection with a business. As an example, if the turnover was €200,000 and the entertaining cost was €5000 then the amount allowed as an expense is the lower of 1% of €200,000=€2000 or €17086 i.e €2000
Q3. I have been in Cyprus for one year and am opening a new restaurant. When do I need to consider VAT registration?
A3. Hi Mark. A trader is required to register if his taxable turnover;
- At the end of any month, the value of taxable supplies for the 12 months then ended exceeds €15600, such calculation being applied at the end of every month or
- at any time there are reasonable grounds to believe that the value of taxable supplies in the next 30 days from that point in time will exceed €15,600. Under this test, a trader who starts a new business with reasonable expectations may give rise to registration immediately.