Income tax in North Cyprus

stusimpson


Joined: 06/08/2007
Posts: 178

Message Posted:
13/07/2009 00:52

Hi apologies if its elsewhere but I trawled through the taxes section with no success.I currently work for a UK company and live in the UK and pay 40% tax.Many of my colleagues live in S.Cyprus and pay minimal tax on their Uk earnings because they spend less than 90 days a year in the UK.



My question is what is the taxation rate in N.Cyprus for someone who spends alot of time out the country,is there a similar deal and do the UK tax authorities have communication with the N.Cyprus tax authorities.Basically is there a legal way to save tax by moving(we have a place here).



Any advice welcome,



Cheers Stu

laptajack


Joined: 04/10/2008
Posts: 95

Message Posted:
13/07/2009 01:42

Im not a tax expert, and you would need to speak with a professional, but IR 20, chapter 2.00 explains this.

You could also check out these articles.

http://www.thisismoney.co.uk/tax/income/article.html?in_article_id=414740&in_page_id=77

http://www.jpoc.net/dotorgsite/jpocorg/workoverseas/uktax/91days.html

I would say that there is no communication between tax offices in TRNC and UK as TRNC is not recognised

keithr


Joined: 20/08/2008
Posts: 720

Message Posted:
13/07/2009 07:10

If your income is derived from savings interest,the you are taxed at 8% on the interest derived. To be taxed on anything else,you would have to be working and without a permit,you cannot,legally. The 90 day rule includes travel days as well,so you would have a hell of a commute on a regular basis.

Harold2555



Joined: 19/04/2008
Posts: 1139

Message Posted:
13/07/2009 08:23

UK Income tax is based on residency and there is resident and ordinarily resident.



Also the source of the income is important, if the income is derived from the UK it is subject to UK tax regardless of your residence (the reason UK pensions are taxed)



If you have a full time overseas contract of employment that covers a whole tax year and you do not breach the 91 or 183 day rules you are not likely to be deemed resident nor ordinarily resident in the UK and thus there will be no UK tax to pay on your overseas income. Tax would still be payable on any UK sourced income such as savings or rents.



There is no double tax treaty between the UK and TRNC, but the abscence of this does not affect the position if you meet the criteria outlined above.



Seek professional individual advice as this is an area of great complexity.





Harold2555

wanderer


Joined: 05/02/2009
Posts: 1653

Message Posted:
13/07/2009 12:03

Harold if you are in receipt of a UK pension and resident in a double tax treaty country would you be able to pay tax at the lower rate of the resident country or would you still be stuck with the UK rate as its a pension?

Arthur


Joined: 04/11/2008
Posts: 687

Message Posted:
13/07/2009 15:58

UK sourced income [i.e. pension] will be taxed at the UK rate. I can't speak for TRNC, but if you're resident in UK you get double tax relief on tax paid on foreign income, which can reduce or eliminate the UK liability. However, you can't get a refund if the overseas tax is higher than UK rate [just means no tax payable in UK on that source]. I'm sure the same will apply in TRNC for income taxed in UK.

queue


Joined: 07/04/2008
Posts: 8

Message Posted:
13/07/2009 16:54

Hi Stu,



My understanding is that you will have UK tax deducted at source as your employed by a UK domiciled company.



If you are outside the UK for tax purposes by virtue of days spent overseas then, (if), the country in which you are resident for tax has a double taxation agreement with the UK the amount of tax deducted on your UK earnings can be set against your liability in the country in which you are resident. But, I don't believe the TRNC has a double taxation agreement with the UK. Therefore, if you do become resident in TRNC then you couldn't reclaim tax on your UK earnings and might also have a liability in the TRNC.



I'm not quite sure what is and isnt taxable for residents of the TRNC but if I find anything else I shall let you know.



Regards,



Q.

Geoff


Joined: 25/06/2008
Posts: 1370

Message Posted:
13/07/2009 19:41

Re No. 6. You can avoid tax on your UK Pension (State) by (1) Being Resident in Cyprus (N or S) and ALSO (2) being a NON DOMICILE of the UK. To get (2) you must have NO ties with UK, no assets, no nowt, no credit cards, etc.

Geejay


Joined: 18/04/2009
Posts: 475

Message Posted:
14/07/2009 09:01

The information I received from HMCE (some time ago) was that any earnings in the UK are taxable in the UK and that this includes retirement pensions paid for from past UK earnings. This seems to be the case even though you are domiciled outside the UK.