Inheritance taxes and gift taxes are relatively straightforward in Cyprus. There are none. However, Cyprus succession law is not as straightforward and if steps are not taken, the forced heirship rules may result in an estate not passing as intended.
Cyprus succession law is designed to keep property within the bloodline. If you are resident in Cyprus this may result in a minimum proportion of your worldwide estate being allocated to specific heirs, even if the Will states otherwise.
For example, if a testator dies leaving a spouse and children or no spouse but grandchildren, 75% of their estates is reserved for this class of heirs. The available part of the estate which can be passed by will must not exceed 25% of the net value of the estate.
Since the application of EU Succession Regulation 650/2012 – (also known as “Brussels IV”) on 17 August 2015, a testator has the option to override local succession laws by applying the law of the law of the country of their nationality over the the law of the country of their habitual residence. The choice of applicable law must be clearly expressed in a Will, otherwise the law of the country of residence will apply to the disposal of movable and immovable property.
This means that Cyprus forced heirship rules could be avoided and the estate distributed according to the testator’s wishes under the law of their “‘home” country, such as England and Wales.
This regulation also introduced a standard European grant of probate – the ‘European certificate of succession’. This can significantly reduce time and cost by giving the administrators of an estate the authority to transfer and dispose of assets across the EU without the need for multiple grants of probate.
Brussels IV applies to all nationalities resident or owning assets within participating EU countries, including non-EU citizens. As a result, even though certain countries have opted out of Brussels IV (UK, Ireland and Denmark), nationals form these countries can still choose the relevant laws of their home countries to apply in how their estates is passed on.
Note that Brussels IV only affects succession law and does not affect inheritance tax liability. If you have assets in more than one country and different inheritance tax regimes apply, the double tax treaty or the national tax rules will determine where and how succession tax is paid. For peace of mind, take specialist, cross-border advice to establish the most appropriate and tax-efficient estate plan for your family.
It is important that you understand the consequences and explore all the options available to achieve your objectives and establish what would work best for you and your heirs.
For further information on Cyprus wills, succession, inheritance, administration of estates and probate laws see the website of Cyprus Probate Lawyers.
How can we help you?
If you have not updated your will, you should urgently review it to ensure it takes the new rules into account.
Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law.
The above should be used as a source of general information only. It is not intended to give a definitive statement of the law.
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