To begin with let’s tackle the tax regime in North Cyprus. As Northern Cyprus is outside the EU and not signed up to the terms and conditions of the EU Savings Tax Directive, it is possible and legal, (depending on your own personal circumstances), to offshore all your money legitimately and only pay absolutely minimal tax on the money you remit to North Cyprus.
In 2005 the central bank and the government in Turkey knocked off a handful of zeros from their currency and today the currency in both Northern Cyprus and Turkey is the yeni, (new), Turkish lira. Exchange rates fluctuate, but on the whole the currency is now very stable. The yeni/new part of the currency’s name is to be removed in 2009, ending the novelty completely, but we thought we’d keep it for posterity!
The economy in North Cyprus is severely hampered by its continuing isolation and the embargoes placed upon it. It relies heavily on Turkey for economic and monetary support.