Paphos People

Hi Guys
Can anyone out there advise on the Income Tax & Pension ‘rules?’
As you may already know, Moira and I will be taking early retirement and moving over as soon as our house is sold. Apart from savings, we will initially have a couple of private pensions, with a military pension kicking in within a couple of years and state pensions a few years later.
Below are a couple of bits of information I have had on ‘income tax’ to be paid by retirees. The second one seems too good to be true and as they say, if it’s too good to be true, it probably isn’t.
Any advice appreciated.

White & Georgiou
Quote
“You need to decide which Tax method is best for you, €19500 allowance and 20% going up in tiers ( which is how employed people are taxed) or if you have only pensions you can choose €3417 and then a flat rate of 5%. I always calculate both ways for my clients, so they can see clearly.”

A.N Other ‘advisor’
Quote
“If an expat pensioner has a low income of, for example, €8,000, they would not make the election to pay 5 per cent, as they could pay no tax at all under the normal system. On reaching the €19500 threshold, you could then elect to pay the 5% rate. This means it makes sense to get your UK pension paid gross and then pay income tax on it in Cyprus.”

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Dave
Moira And Dave

“I know that you believe you understand what you think I said, but I'm not sure you realize that what you heard is not what I meant.”

I do not pay any tax at all! I fall beneath the €19500 per annum, and it's fantastic! In the UK when I was working I paid 22% tax on company pensions I was being paid - when I moved here, I got a refund from Her Majestys Inland revenue for tax paid since the date of my move - yessssss - first tax rebate I had ever had in 42 years working!

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Jean

Retirement - harder work than working - But much more fun

Thanks Jean

We will stay UNDER the €19,500 UNTIL our state pensions start. What I was wondering was, can we then 'elect' to go onto the 5% rate instead of the big one?

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Dave
Moira And Dave

“I know that you believe you understand what you think I said, but I'm not sure you realize that what you heard is not what I meant.”

As far as I am aware, although I'm sure someone will be along to confirm it. By the way, the €19500 is EACH!

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Jean

Retirement - harder work than working - But much more fun

I know this is about income tax, but don't forget you have to pay defence tax on any worldwide interest earned. I believe it is 3% if total income under Euro 12K or 10% if over.

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TARRAH

Don't forget that if you register as a pensioner to opt for the 5% tax you are then prohibited by law from doing any form of work. Paid or unpaid including working in charity shops.
Unless you are on a high joint income it is generally better to register as working and get the €19500 per person tax allowance



There are ways to legally avoid this also.

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Experience is what you get when you don't get what you want....

My understanding is that the choice is one way. If you choose the 5% option you can't change back.

The critical figure is higher than the €19500 allowance that you each get, infact the point at which it is cheaper to use the 5% scale is nearly €25,000.
Only after this joint income of €50,000 pa would it be cheaper to use the 5% rate.
But you would need to keep an eye on the tax breaks that this government plays around with to try and balance the books

HTH

D&P

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Don & Pam
Our Paphos Photo Website

Dear Don & Pam

Due to work load I have not kept a close eye on any postings and maybe It is better for me to clarily Pensioners Options.

We at White & Georgiou have many Tax clients in Pafos.

To explain more clearly a Tax payer has 2 options each year.

1. To be taxed at Normal rates the same as an employed person ie. 19500.00 Euros Tax free and after this 20% on sliding scale. This works for most people but not all.

2. Given that a person only has overseas pensions as income, A Tax free Allowance of 3417.00 Euros and a flat rate of 5% on all overseas pensions.

This is in no way, to good to be true, its a fact and is available to all UK Citizens that take up permanent residence in Cyprus and you do not need to remit your pensions directly to Cyprus.

We calculate on both options each year to ensure that our clients acheive the best option for them each year. It is also true that you can opt for whichever option is better for you each year.
We also give clear documented pricing and are happy to answer any questions.

Regards
Paphian 4761

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White & Georgiou
Expatriate Services

Website & 2011 Price List
http://www.paphospeople.com/white_georgiou.html

so - we are all right.
Hurrah