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A brief outlook on Inheritance Law in Cyprus the (EU) Regulation 650/2012 and an insight in Inheritance Tax

 

According to Cypriot Inheritance Law when a person passes away, their assets (immovable and movable property) will be divided among his/her heirs according to the law of the country they resided. Often, there is the misconception that the assets of the estate of a foreigner living in Cyprus must be distribute following Cypriot law, which imposes “forced heir-ship rules” according to the provisions of the Wills and Succession Law/Cap. 195.

The (EU) Regulation 650/2012 allows EU citizens to choose the law of their country of nationality as the law applicable to their estate. Such a choice of Law must be expressed in the will of the testator.

A “foreigner” living in Cyprus can make a Will specifically for the assets concerning the jurisdiction of Cyprus, leaving all their property or a portion of it to the person of their choice. The Cyprus Will must declare the law that the Testator chooses and wishes to govern the Will by the principle of free disposition of property by testament. This is accepted by the Central Wills Registry in Cyprus for when the Will is ratified.

In a case where a foreigner residing in Cyprus dies domiciled in Cyprus and intestate, the estate will be distributed according to Cypriot law or by the law of their choice (their national law) if they have included this statement in their Will. It is worth highlighting the importance to clarify that Domicile is not the same as Tax Residence.

With respect to Inheritance Tax which is a matter of concern to many, the Inheritance Tax was abolished in Cyprus in 2000. However, in regards to UK residents living in Cyprus who still own property in their country of domicile, the Inheritance Tax is capped at 40%. It is worth noticing that the property or assets must also be declared back in the UK when dealing with a person who lived in Cyprus and was domiciled there to avoid Double Taxation and to obey the Double Taxation Laws. The tax paid in Cyprus can be offset against the tax payable in the UK. If there is no tax payable in Cyprus, the full amount will be paid in the UK.

Phanouria Georgiou

Lawyer - Legal Advisor - Mediator 

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