-- Relocating to a warm, low-cost destination with an expat-friendly tax regime is a goal for many people approaching retirement. Having emerged as one of the top destinations over the last few years, Cyprus has become a contender among other long-standing options, such as Spain and France.
According to the latest statistics, the island, which has a population of roughly 1.36 million, is also home to 260,000 foreign nationals, with a 17.5% increase in permits granted to non-EU visa applicants last year compared to 2023.
Chase Buchanan Private Wealth Management, the global financial advisory specialists supporting expatriates around the world, share some insights into why Cyprus has developed a reputation as a desirable location for retirees, as well as some of the tax incentives available for those making key retirement decisions.
The Draw of Cyprus for Expat Retirees Relocating Overseas
The first, and perhaps most obvious attraction of Cyprus is its location, between Greece and Turkey. This all but guarantees sunny Mediterranean weather, and proximity to world-class beaches, archaeological sites, and well-appointed cities with amenities that include hotels, restaurants, and ample local transportation.
Of course, living in a new country permanently differs from spending a couple of weeks on holiday, but the climate is a big factor. This is alongside the lower costs of living when compared to the UK, and how that affects lifestyle expectations for retirees reliant on investment, pension and savings income to finance their retirements.
While the difference in living costs may be more pronounced for expats moving from London or another major city elsewhere, the contrasts are substantial. Foreign nationals will find that, on average, general living costs are 11.9% lower in Cyprus, property rental prices are 16.7% more affordable, groceries cost 10% less, and public transport is almost 40% cheaper on the island.
Retirees often look to purchase a permanent home, and they stand to make cost savings here too, including for those considering selling a British property or liquidating investment real estate to help fund their retirement.
Buying a central apartment in a Cypriot city costs approximately 25% less than in a UK equivalent location, while a larger three-bedroom home in a smaller town or semi-rural area typically commands a budget that is roughly 12.6% lower.
Understanding Why the Cypriot Tax Regime Attracts Affluent Retirees
Taxes remain a significant aspect of life throughout retirement, particularly for those with generous portfolios, pension incomes, or ongoing returns from assets and investments, especially when it comes to succession planning and forecasting inheritance tax.
We'd always recommend speaking to an accredited adviser, as inheritance taxation can be complex. However, depending on the individual’s circumstances and exposure to UK-based tax, they may be interested to learn that Cyprus does not impose any succession taxes whatsoever.
That doesn't exempt Cypriot residents from UK IHT, where applicable, but can provide the peace of mind that long-term tax obligations for retirees' families will typically be much lower.
In addition, the Cypriot authorities allow retirees to decide how they’d like foreign-source pension incomes to be taxed. They can elect to pay tax on the prevailing income tax rates, which carry a top bracket of 35% on incomes of €60,000, or choose to pay a flat rate tax of 5% on earnings above an annual €3,400 allowance.
Other earnings, such as interest payments and dividends, are normally exempt from defence contributions for the first 17 years that an expat lives in Cyprus, which means foreign nationals only need to account for taxation.
Standards of Living and Access to Healthcare for Expats Retiring in Cyprus
The costs of living in Cyprus are more affordable for many, which impacts the quality of living standards that retirees can expect. This is partly due to the stable property market and tourism sectors, which have bolstered the Cypriot economy and continue to provide opportunities for those keen to invest.
In terms of healthcare, something that is always important for retirees, Cyprus performs well, with a developed healthcare system that encompasses both private and public services.
Some expats may hold the S1 form, issued by the NHS in the UK. This entitles holders to receive public healthcare services in Cyprus in the same manner as any citizen, with most treatments and consultations available at no cost or with a minimal charge.
However, most will require comprehensive private health insurance as a condition of their visa. Expats living in Cyprus on nearly every visa will need to provide evidence of sufficient health coverage before they can apply for residency, where they are eligible.
Types of Visa Routes for Foreign Nationals Planning a Cypriot Relocation in Retirement
Our final area to consider is the ease of applying for and qualifying for a visa. Like many EU countries, Cyprus has removed its citizenship-by-investment programme, following criticism of these schemes by the European Commission. That doesn’t mean that there aren't alternative visa routes, including the Cyprus Permanent Residence Program.
Applicants who successfully apply gain the right to live in Cyprus permanently as residents, provided they make an approved investment. Investment options include real estate purchases worth at least €300,000, investing in a Cypriot company or purchasing collective investment units through the Cyprus Investment Fund Association.
Further criteria apply, and applicants must demonstrate that they have a minimum annual income, originating overseas, of at least €50,000 plus €15,000 for a financially dependent spouse and €10,000 for any children included on the application.
Other options include temporary, renewable residence permits, with many expats choosing to relocate under a temporary permit while pending an application for the longer-term 'Category F' residence permit. This enables wealthy retirees to secure permanent residency after providing evidence of a secured annual income. While processing times can be considerably longer than those associated with the 'golden visa', the income thresholds are lower.
More details about visa categories and criteria are best sourced directly through the Cypriot Ministry of Foreign Affairs, which provides up-to-date information about each permit or visa.
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About Us: About Chase Buchanan Private Wealth Management Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, France, Malta, Portugal, Spain, the UK and the USA. Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15 and offers its services in the EU on a cross-border basis as per the provisions of MiFID. Chase Buchanan Insurance Services, Agents & Advisors is authorised and regulated by the Cyprus Insurance Companies Control Service with License No 6883 and offers services in the EU on a cross-border basis as per the provisions of the Insurance Distribution Directive (IDD). Investing in financial instruments involves risk and may not be suitable for all investors. The value of investments may go up as well as down and past performance is not a reliable indicator of future results. You may lose part or all of your invested capital.
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