Wills and Inheritance Law in Cyprus

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Wills and Inheritance Law in Cyprus

The rules of Cyprus inheritance will affect different people in different ways depending on where they are from, what assets they have and their intended home for the future.

The necessity for a Cyprus Will depends on:

1. Whether you are domiciled in Cyprus (see below); and
2. Whether you have immovable property in Cyprus.

If you are domiciled in Cyprus then the Cyprus rules of succession will govern your entire estate in Cyprus. If you are not domiciled in Cyprus but you nonetheless have immovable property on the island then the Cyprus rules of succession will only govern your immovable property in Cyprus.

The laws of succession in Cyprus are not the same as in other countries (such as the UK) and therefore it is very important for anyone moving to Cyprus or buying property in Cyprus to update their Will and to make a separate document governing Cyprus assets.

Cyprus Domicile

Broadly speaking, every person initially has a "domicile of birth" and this will remain their country of domicile until actively changed to a "domicile of choice." In order to make Cyprus a person's "domicile of choice," they must show that they are permanently resident in Cyprus and that they have the intention to remain in Cyprus for the rest of their days.

The law of domicile is a very complex area of law and it is by no means easy to change a domicile to Cyprus. Expert advice should be sought as there are steps that can be taken to change domicile.

Domicile matters for the simple reason that it affects inheritance tax. For example, a person domiciled in the UK will pay UK inheritance tax on their worldwide assets; that is, including their property in Cyprus.

Passing Assets by Will

In Cyprus it is only possible for a person who (or whose father) was born in the UK or a Commonwealth country to make a Will to determine who will inherit their entire estate in Cyprus.

A person who does not fall within this category can still make a Will to govern some of their estate and can also consider other estate planning devices in order to ensure that their assets pass in the manner they want them to.

If a Cyprus Will can be made

If assets can be passed by Will in Cyprus then the will maker should be aware that the formalities of a Will in Cyprus are different to any other country. Great care must be taken in drafting such a document in order to ensure that the new Cyprus Will does not unintentionally revoke any other pre-existing Will dealing with assets in another jurisdiction. Expert advice from a lawyer experienced in multi-jurisdictional Wills is essential.

If a Cyprus Will cannot/ is not made

If a person is not able to make a Cyprus Will, or if they are able to do so but decide not to, then the assets subject to Cyprus law will pass according to the "forced heirship" rules of Cyprus.

Cyprus has a fairly complicated system of inheritance which effectively reserves a certain portion of the estate which must pass according to the rules. The portion which passes according to the forced headship system depends on the surviving relatives of the deceased.

The estate is divided into two sections:

1. the disposable section; and
2. the compulsory section

The disposable section is the amount that can be passed by Will. This will be between a quarter and a half of the estate if there are certain surviving relations still alive (the exact proportion depends on which relatives are still alive at the time of the relevant person's death). Under the Cyprus rules if a person dies leaving no spouse, no child, no descendant of a child, no mother and no father then they can pass the whole of their estate by Will.

The compulsory section will pass according to the forced heirship rules. Once again the exact division of the estate depends on who the surviving relations are.

Inheritance Tax in Cyprus

Domicile not only has an impact on whether Cyprus succession law applies, but also inheritance tax. There is no estate duty payable in Cyprus for Cyprus domiciles. Note, however, that domiciles of other jurisdictions may still be liable to pay inheritance tax in their country of domicile.

If inheritance tax poses a potential problem (for example if a person has assets worth more than GBP 325,000 in the UK) then there are steps that can be taken in a Will in order to reduce (or even remove) tax liability. Expert legal advice from a lawyer with knowledge of both affected jurisdictions is essential.

Prepared by: Louise Zambartas UK Solicitor/Cyprus Advocate of L.G. Zambartas LLC, Law Offices, Gregoriou Building, Office 61, 6th Floor, 95 Griva Dighenis Street, Limassol 3101, Cyprus
Tel: +357 25 373734 / Fax: 357 25 725502 / Website / e-mail

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