Continuing economic problems in
Cyprus may see foreign residents of the island hit by rises in two major taxes.
The nation is currently negotiating the terms of an EU bailout to help finance
its debts, following similar rescue packages for Greece, Ireland and Portugal.
The Cypriot government is
expected to announce significant tax rises as part of the austerity package,
which will see both income and property taxes rise. Keep reading to learn more.
Cyprus set to lose its reputation as a low tax country
One of the main reasons that
foreigners buy property in Cyprus is that the country has relatively low rates
of tax. However, taxes are set to rise as part of the bailout deal.
Currently, the top rate of income
tax in Cyprus is 35 per cent, compared to 52 per cent in Spain, 45 per cent in
the UK and 46.5 per cent in Portugal. And, you can earn up to of ââ¬19,500
(ã15,660) before you start to pay tax.
A spokesman for international tax
specialist Blevins Franks said: ââ¬ÅWe cannot rule out the possibility that it
will look to earn more revenue from income taxes, whether from employment or
income from capital. Tax rates here are relatively low.ââ¬Â
The Daily Telegraph reports that ââ¬Ëexpats feel the government is under
pressure to increase its tax grab to reduce its fiscal debts as quickly as
possible.ââ¬â¢
One British expat, who wished to
remain anonymous, told the newspaper: ââ¬ÅBasically, the government is looking at
lots of different ways it could raise its revenues without too much resistance
from people.ââ¬Â
As well as possible changes to
income tax, the Cypriot government is also considering an additional property
tax on all homes worth more than ââ¬500,000 (ã402,200). This is on top of plans
to introduce medical fees in state hospitals and a rise in Value Added Tax
(VAT) to 18 per cent.
author Nick
Marr
