Want another reason to settle with your family in Cyprus? Then consider this: they won't have to pay a penny of inheritance tax on the estate you leave behind. All you have to do is prove to the Cyprian authorities that the island will be your home for life.
As you might guess, this isn't as easy as it sounds. You'll have to jump through many bureaucratic hoops to gift your family a tax-free estate. Yet, the fact that Cyprus has this provision in its tax code should go a long way in telling you how much it cares for its citizens.
This might help you make up your mind if thinking about relocating to Cyprus. Or if you are already in the country and wondering whether you should call it your home for life. But put any decision on hold until you have read our guide on inheritance tax in Cyprus in 2024.
Here is what this article will cover:
- Inheritance tax in Cyprus in 2024
- What are the rules of inheritance in Cyprus?
- What are the requirements for a will to be valid?
- Frequently asked questions
Inheritance Tax in Cyprus in 2024
Cyprus abolished inheritance tax or estate duty on 1 January 2000. All Cyprus citizens, as well as foreigners domiciled in the country and/or owning real estate there, are charged zero tax on the estate they leave behind for their loved ones.
Let's discuss a few important points about inheritance tax in Cyprus in 2024:
Domicile
Bear in mind that domicile doesn't only mean permanent resident. Any person who intends to get a Cyprian domicile must prove that:
- They have been living in the country for quite some time
- They plan to live in Cyprus for the rest of their life.
The Cyprian authorities who are given the power to award domiciles will consider multiple factors before granting you one. These factors include your intentions, business interests in the country, social interests in Cyprus, and any property you own, among others.
If you're unable to convince the Cyprian authorities of your intentions, they will decide against granting you the domicile. In such a scenario, you'll be exposed to your native country's rule of inheritance, which in the case of the United Kingdom means a 40% tax above a certain threshold.
Transfer Fee
While it's true that there is no inheritance tax in Cyprus, the person(s) inheriting the estate will still have to pay a transfer fee to the Land Registry office. Furthermore, the transfer fee might be as much as 8% of the property's value in certain cases.
The rate of transfer fee depends on two factors:
1) Relationship between the deceased and the beneficiary
The rules dictate that the closer the blood relationship between the beneficiary and the decreased, the lower the transfer fee rate. It means that children or parents of the deceased will have to pay a lower fee than the spouse, who, in turn, would be charged less than a third-degree family member.
Here are different transfer fee rates based on who is getting the property:
- 4% – from parents to children
- 8% – Between spouses
- 8% – Between third-degree relatives
2) Value of Property
Value of the property is another factor that determines the rate of transfer fee. The rate starts from 3%, of the property's value, with the ceiling set at 8%. This distinguishes Cyprus from countries such as the USA, where inheritance tax is 40% for the highest net worth individuals.
Here are the rates of transfer fee based on the value of the property:
- 3% – up to €85,000
- 5% – from €85,000 to €171,000
- 8% - €171,000 and over
What are the rules of Inheritance in Cyprus?
The provisions outlined in the Inheritance Law apply to all Cypriots. All foreigners owning real estate in the country, domiciled in Cyprus or just living there are also exposed to the inheritance law. Under the inheritance law, the division of an estate is carried out per the following rules:
- If the deceased has children and a spouse, the estate they're leaving behind will be divided into equal shares.
- If the deceased has children but isn't married, the estate will be divided into equal shares between their offspring.
- If the deceased only has spouse and parents, the estate will be divided in half between both parties.
- If the deceased only have surviving parents, they will be distributed their entire estate.
What are the requirements for a will to be valid?
If the deceased had no close relatives, their estate will be divided according to the wishes outlined in their will. It's important to note that the Cyprus inheritance law requires that the testator, as well as at least one person authorized by them, must sign the will.
Furthermore, for the will to be considered valid, at least 2 persons must be present at the time of its drafting. They must also sign the will. Finally, if the length of the will exceeds one page, the testator is required to sign every page. Only then will the will be considered valid.
Frequently Asked Questions
How does inheritance work in Cyprus?
Cyprus charges no tax on inheritance since 1 January 2000. Instead, the country only charges a transfer fee, whose rate depends on the relationship of the beneficiaries with the deceased and the value of the property the deceased has left behind.
How much does probate cost in Cyprus?
The cost of probate in Cyprus depends on multiple factors. These include the nature of the estate, whether the deceased is a foreigner or a Cypriot, whether all the beneficiaries are foreigners or Cypriots, etc. That means that the probate cost is decided on a case-to-case basis.
How long does probate take in Europe?
Most probates take 4 months from the date of commencement. However, the exact duration will be decided by tax issues, the complexity of the will, the value of assets in Cyprus, and more.