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DDD's NaJoPoMo - Only In Cyprus #29

Post 1

Deep Doo Doo

Depending on your viewpoint, one of the major advantages of being a Cyprus resident is its very favourable tax regimes. Cyprus has the lowest tax burden of all the EU countries and it's not just by a trivial margin.

I'll spare you the complex calculations and methodology used, but I'm quoting from a chart prepared by some of the top players in economic research who've undertaken detailed studies and extensive analysis in these matters. In short, this data is accurate - trust me - but it could be open to interpretation if you decide to lob a curve-ball into the modelling technique. For the purposes of this journal, it'll do fine.

Have sympathy for the Belgians who top the list of fleeced countries. With an average salary of €51,295 they get to see the least, losing 58.83% in deductions, and taking home just €21,118. Fairing rather well are UK workers, who starting with €47,118 (converted from £GBP) lose 37.23%, pocketing €29,576. The happiest chappies, are of course, the Cypriots. Although starting with a relatively low wage of €22,778, they are only hit at a rate of 18.65%, leaving €18,530 to donate to their wives as housekeeping.

Permit me, if you will, to bandy around a few more figures. No-one pays personal income tax in Cyprus until their earnings exceed €19,500 - there's some exceptional joined-up thinking going on here; €19,500 is considered the minimum salary required to avoid potential hardship, so no tax applies. Even if you are wealthy, you'll never part with more than 30% of your income in tax; it's the top rate. VAT is pegged at the EU minimum of 15%, corporation tax is just 10% while council/municipality tax (which varies with each administrative area) costs me the princely sum of €91. Per year.

There are some stealth taxes, of course. A €2 levy if you need to see the doctor, 4% import tax on ostrich eggs (not applicable if sourced from the EU) and €0.02 each time you buy a postage stamp. As if the 2 cent charge was not galling enough, you are actually issued with a separate 2 cent stamp, which must be licked and stuck alongside the main postal fee. It's not surprising that many were up in arms when this unfair practice was introduced - not only do you lose further wealth in back-door taxation, but there's also the imposition of enforced labour when having to apply additional stamps without receiving payment for your effort.

Just like the Greeks, the Cypriots abhor taxes. While legal avoidance has become a national challenge, illegal evasion is rife. Ask any accountant, solicitor or private doctor for an itemised bill and you'll be swiftly advised that a further 15% will be added on top of the quoted fee for provision of 'a proper one'. Cash, as always, is the order of the day - never insult a Cypriot tradesperson by proffering a cheque, or God-forbid, a credit card.

In concluding, then, I pose the question as to why so many expats are now leaving Cyprus' shores and claiming that she has become far too expensive. For years they have taken advantage of favourable taxation, the cost of living has risen only slightly inline with inflation and commodities such as fuel are still among the cheapest in Europe. Let's have another look at the figures I quoted above.

Your average UK retiree living in Cyprus had an annual income from the UK of €29,576. When adjusted to local conditions it rose to €36,478 - they were living like kings and lauding their wealth among the indigenous population. All was well and good until the £GBP began to plummet against the €uro. From a high of 1.61 to a low of 1.05, they lost 33% of their income, lost their status as kings and found themselves living just above the poverty line. Cyprus, undoubtedly, took the blame.

Cyprus never deserved it. It never became more expensive or any more stringent with taxes. Decisions made in the UK (which, in the good old days, were slated and cited as the reasons for leaving) became the excuse to blame Cyprus for expats' woes.

I'm glad they've gone. The lack of moans and whinges from my fellow compatriots makes Cyprus a far nicer place to be. And it was almost perfect to begin with.


DDD's NaJoPoMo - Only In Cyprus #29

Post 2

Researcher 14993127

I expect there's a lot of ex-pats dotted around Europe feeling the squeeze now the euro is in dire straits. I have friends in Spain in the process of moving back to the UK having lost a bundle on property for one thing. The grass isn't always greener on the other side is it? smiley - erm

smiley - cat


DDD's NaJoPoMo - Only In Cyprus #29

Post 3

Deep Doo Doo

The €uro has only been reported to be in dire straits recently, though, and a lot of that is being speculated by the markets.

It's still a very strong currency. UK GBP is a different matter entirely - its performance against the € has been appalling in recent years, hence the spending capability of UK expats diminishing considerably.

I'm not speculating about your friends in Spain, but many there bought when the UK was booming and looked at cheap property abroad as a good investment. The Spanish property market could still have collapsed and the 'long-termers' would have taken the drop in property values on the chin, stuck with it and waited for better times.

However, those that took mortgages to finance what they really couldn't afford (based upon perceived equity in their UK homes) are the ones that are now selling up and returning - their GBP buys an almost equivalent €1 rather than €1.50 - faced with increasing mortgage maintenance costs and lowering property values, it's not surprising that many are now going home to roost having had their wings clipped.

A sad state of affairs all round.

The grass certainly isn't greener for the green and naive. Whatever the state of world affairs, there will always be those who long for Utopia and will grab the opportunity given any chance. They are ultimately the ones who suffer, having taken the short-term, quick-fix route, to achieve their dreams.


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