The new arrival becomes tax resident in Cyprus after living in the island for 183 days in a tax year. The tax year is the calendar year. Residence brings with it liability to income tax and to the special contribution for defence. The other main taxes are the immovable property tax and the capital gains tax.

However delightful it may be as a place to live, there are limited investment opportunities in Cyprus and the new resident will probably continue to hold investments, property and perhaps a business in the U.K. He may already have moved his banking accounts to the Isle of Man, Jersey or Guernsey. One of the consequences of continuing to hold assets in the U.K. will be an ongoing liability to income tax there. With the adoption of the European Savings Tax Directive interest received on the offshore banking accounts, may also be taxed, at a rate of 15%, but which will rise to 20% in 2008 and 35% in 2011. Depending on the nature of the income, relief may or may not be available against the corresponding Cyprus taxes and in most cases the end result is likely to be that tax is paid at the higher of the two rates.

Assets left behind in the U.K. will attract a charge to inheritance tax there on death, or on the death of the survivor if they are left to a surviving spouse. This tax is at the rate of 40% on the aggregate value of assets exceeding