1. The estate of persons domiciled in Cyprus (that is, people who live in Cyprus with the intention of making it their permanent home)
2. The immovable property of those not domiciled in Cyprus.
The laws of succession in Cyprus are not the same as in the UK or elsewhere in Europe and therefore it is very important for anyone moving to Cyprus or buying property in Cyprus to review and update their Will.
Being Domiciled in Cyprus
For Cypriot domiciles: there is no estate duty on assets in Cyprus.
Broadly speaking, every person initially has a “domicile of birth” and this will remain their country of domicile until actively changed to a “domicile of choice.” In order to make Cyprus to a “domicile of choice,” a person must show that they are permanently resident in Cyprus and that they have the intention to remain in Cyprus for the rest of their days.
The law of domicile is a very complex area of law and it is by no means easy to change a domicile to Cyprus. Expert advice should certainly be sought as there are steps that can be taken to change domicile.
Passing Assets by Will
In Cyprus it is possible for a person who (or whose father) was born in the UK or in a Commonwealth country to make a Will to determine who will inherit their estate in Cyprus.
In the case of a person who does not fall within this category: that part of their estate governed by the Cyprus law will pass according to the Cyprus law of succession (see below).
Types of Will
If your assets can pass by Will in Cyprus then you will need to consider making a Cyprus Will. The formalities of a Will in Cyprus are different to the formalities in the UK and it is recommended to make a Cyprus Will to deal specifically with that part of the estate governed by Cyprus law.
Great care must be taken in drafting such a document in order to ensure that the new Cyprus Will does not unintentionally revoke any other pre-existing Will. Expert advice from a lawyer experienced in both jurisdictions is essential.
The Cyprus Laws of Succession
If a person is not able to make a Cyprus Will, or if they are able to do so – but decide not to, then the assets subject to Cyprus law will pass according to the rules of Cyprus.
Cyprus has a fairly complicated system of forced heirship which effectively reserves a certain proportion of the estate which must pass according a set system of inheritance. The proportion which passes according to the forced heirship system depends on the surviving relatives of the deceased.
The estate will be divided into two sections:
* the disposable section
* the compulsory section
The disposable section is the amount that can be passed by Will. This will be between a quarter and a half of the estate if there are certain surviving relations still alive (the exact proportion depends on which relatives are still alive). Under the Cyprus rules if a person dies leaving no spouse, no child, no descendant of a child, no mother and no father then they can pass the whole of their estate by Will.
The compulsory section will pass according to the forced heirship rules. Once again the exact division of the estate depends on who the surviving relations are.
Inheritance Tax in Cyprus
Estate duty was abolished in Cyprus in 2001. Note, however, that domiciles of other jurisdictions may still be liable to pay inheritance tax there.
If inheritance tax poses a potential problem (for example if a person has assets worth more than GBP 300.000 in the UK) then there are steps that can be taken in a Will in order to reduce (or even remove) tax liability. Expert legal advice from a lawyer with knowledge of both affected jurisdictions is essential.
Published by Lowtax.net
