Cyprus: Private Client Tax – Cyprus

Last Updated: 15 April 2015
Article by Elias Neocleous and Philippos Aristotelous


1.1 Domestic law

1.1.1 Briefly describe your legal system and its origins

It should be noted at the outset that this chapter refers only to the part of Cyprus controlled by the government of the Republic of Cyprus, and not to the area occupied by Turkish troops since the invasion of 1974.

Like most former British colonies, Cyprus has a legal system based on English law, particularly common law rules and principles and rules of equity. When Cyprus became independent in 1960, the Constitution of the new Republic provided that the laws previously applicable should remain in force until repealed or amended by new laws of the Republic. Since Cyprus joined the EU on 1 May 2004, EU law has had direct effect and where there is a conflict between EU law and domestic law, EU law prevails. Common law is still the basis of the administration of justice and English law precedents after 1960 are highly persuasive.

1.1.2 What is the scope of your succession law?

The principal laws governing succession in Cyprus are the Wills and Succession Law (Succession Law) and the Administration of Estates Law. The Succession Law deals with both wills and intestacy. The provisions regarding wills are based on the English Wills Act of 1837; the provisions regarding intestacy are based on the Italian Civil Code.

Cyprus law restricts testators' right to dispose of their property by will. The estate is divided into a "disposable portion", which can validly be disposed of by will, and a "statutory portion", which cannot, but instead is reserved for the forebears, widow and descendants of the deceased and distributed according to the rules of intestacy.

A will that purports to dispose of more than the disposable portion of the estate is not invalid, but the dispositions in the will are proportionally reduced so as to be limited to the disposable portion.

The statutory portion is a variable proportion of the net estate, calculated by reference to which relatives survive the deceased:

  • If the deceased is survived by a living child or a descendant of a child, the statutory portion is three-quarters of the net estate.
  • If the deceased is survived by a spouse or parent (or both), but not by any children or their descendants, the statutory portion is half of the net estate.
  • If there is no surviving spouse, parent, child or descendant of a child the statutory portion is reduced to nil.

1.1.3 When are individuals and their property subject to succession rules?

The Succession Law regulates the succession to the estate of all persons domiciled in Cyprus irrespective of nationality or residence, as well as the succession to any immoveable property located in Cyprus, regardless of the domicile nationality or residence of the owner.

Section 42 of the Succession Law exempts from the forced heirship provisions anyone who was born, or whose father was born, in the United Kingdom or certain other countries (most Commonwealth countries). Such individuals are entitled to dispose of all their property by will.

In practice, with proper planning, testators of any nationality may easily avoid the effects of the forced heirship regime.

1.2 Private international law

1.2.1 What is the jurisdiction of local courts in international disputes?

Cyprus is a common law jurisdiction and, although important areas of substantive law have been codified, English common law principles are applied by the courts where there is no specific domestic legislation or case law on the point at issue.

The Courts of Justice Law, Law 14 of 1960 (Courts Law) determines the composition of and the powers vested in and exercised by the courts, and also provides for their jurisdiction. Article 29(1)(c) of the Courts Law provides that the courts of Cyprus will apply "the common law and the doctrines of equity save in so far as other provision has been or shall be made by any law made or becoming applicable under the Constitution...."

1.2.2 What approach do local courts take to conflict of laws?

It has been firmly established by the Supreme Court case law that principles of private international law form part of the law of Cyprus in so far as they form part of the common law of England (Patiki v Patiki 20 C.L.R. Pt 1, 45).

In succession matters, as regards the interpretation and implementation of the will, and the law to be applied, the determining factor for immovable property is the location of the property. Disposition of immovable property in Cyprus is governed by Cyprus law as the lex rei sitae (the law where the property is situated) and the restrictions imposed by Cyprus law as to the statutory portion of estates will apply regardless of the testator's nationality or domicile at the time of death, except in the case of citizens of countries falling within the scope of section 42 of the Succession Law (most Commonwealth countries). Succession to real property outside Cyprus is subject to the law of the country in which the assets are located. The disposition of movable property is governed by the law of the testator's national jurisdiction.

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Elias Neocleous
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