Many British pensioners were tempted and encouraged by a very favourable tax regime to retire to Cyprus. Those of them who were resident there for tax purposes were able to have their pensions paid free of UK tax and avail of a Cypriot tax rate which could be as low as five percent. The present financial crisis may well cause them to reconsider their decision. Tight fiscal controls have been imposed on personal accounts and the tax treatment of the future must inevitably be more severe. The calm financial waters of their initial halcyon days are now decidedly choppy. Hopefully most if not all of them will have been sufficiently canny not to have placed more than €100,000 (the equivalent of our £85,000 protected sum) with any Cypriot Bank.
Many British pensioners who retired to the Cypriot sun may now be reconsidering their decision. They will be worried about their savings, worried about the taxation of their income, worried about the cost of living and worried about being unable to realise their assets. It will be interesting to see how many will decide to or indeed be forced to retrace their steps back to Blighty.
Cyprus has been a tax haven for many. A large percentage of its GDP came from its now ravaged financial sector. Its economy will suffer and its British retirees will suffer.