The tax really is nil
This is one of the rare cases in which a zero is genuinely a zero.
| Levy | Position |
|---|---|
| Inheritance and estate duty | abolished with effect from 1 January 2000 |
| Gift tax | abolished 1975 |
| Annual immovable property tax | abolished 2017 |
| Wealth tax | has never existed |
The abolition rests on Law 118(I)/2000, published in the Official Gazette on 21 July 2000 and effective for deaths from 1 January 2000.
Cyprus is therefore among the small group of EU states that do not tax the passing of property on death.
The restriction sits in succession law, not tax law
Anyone who has settled the tax question often treats the subject as closed. That is the mistake.
Under Article 41(1) of the Wills and Succession Law Cap. 195 a will may dispose of only a limited part of the estate:
| Who survives | Disposable portion | Tied |
|---|---|---|
| A child or that child’s descendant | one quarter | three quarters |
| Spouse or parent, no children | one half | one half |
The tied portion goes to the relatives designated by law, regardless of what the will says.
The exception many still rely on no longer exists
Until July 2015 a provision exempted certain non-Cypriot testators from the forced share rules. Someone with an apartment in Cyprus but a home elsewhere could dispose freely.
That provision was removed by Law 96(I)/2015 on 3 July 2015.
This is where old advice becomes dangerous. A will drawn up in 2012 with that exception in mind rests on a rule that has not existed for eleven years. Nobody notices while the testator is alive.
The route that is open instead
The EU Succession Regulation 650/2012 applies to deaths from 17 August 2015.
Its basic rule: the law of the state in which the person was last habitually resident applies.
Under Article 22 a person may instead choose the law of a state whose nationality they hold. The choice has to be expressly declared in the will. If the chosen law permits free disposal, the Cyprus forced share rules give way.
Whether that holds in an individual case depends on the nationality, the chosen law and the wording. That is a question for a lawyer and not one an overview can answer.
What we could not substantiate
- The exact designation of the removed provision. The sources speak sometimes of Article 42, sometimes of section 42. We did not inspect the consolidated text of Cap. 195 on this.
- The fractions in the wording of the law. A quarter and a half appear consistently in several law firm presentations. We did not cross-check them against the official statutory text.
- The exact scope of application. That Cyprus succession law covers immovable property in Cyprus and the worldwide estate where there is domicile in Cyprus appears in one source and is plausible; we did not confirm it.
All three points decide, when it matters, who gets what. That is not something to take from an article, including this one: Cyprus setup from one place.
What is taxable afterwards after all
Inheriting itself triggers no tax. Two things afterwards do:
The sale of inherited property. Capital gains tax of 20 % applies to the gain. What is deductible and which lifetime exemptions apply is in the guide to capital gains tax.
Ongoing income. Rents, interest and dividends from inherited assets are taxed normally, depending on whether the heir is resident and domiciled in Cyprus. More on that in the guide to non-dom status and the guide to tax residency.