Cyprus C.R.S. Implementation Decree: An implementation decree has been issued at the beginning of the New Year 2016 by the Cypriot Ministry of Finance. This implements the O.E.C.D’S Common Reporting Standard (C.R.S) on the Automatic Exchange of information on financial and tax affairs of multinationals between countries that have agreed to and signed the Multilateral Competent Authority Agreement. This makes Cyprus as one of the first countries to implement the C.R.S. as from the beginning of this year, with the first exchange of information to commence in September 2017 for the reporting period of 2016. With this said, it means that already Cypriot Financial institutions are required/started to gather and collect information for the aforementioned purpose. This information is to be submitted to the Tax Department in Cyprus as the official reporting authority.
Cyprus C.R.S. Implementation Decree – C.R.S. Decree Framework
The Cyprus C.R.S. Implementation Decree which is already in effect puts down guidelines and the framework that needs to be followed by Cypriot Financial institutions in the process of collection and review of customer information in respect to tax residence.The Decree in more specific terms sets out main rules that govern the whole client acceptance procedures. This includes due diligence and KYC procedures and reporting obligations. The scope of the C.R.S. is analyzed and defined in depth within the decree which also includes all reporting obligations, deadlines and sanctions.
Cyprus C.R.S. Implementation Decree : Cypriot Financial institutions are required to collect information in respect to tax identification and tax residence of all new customers. In respect to existing customers, the financial institutions already hold customer personal information that may be relied upon in obtaining tax residence information. The information to be collected among other information includes name of customer, residential address and passport number as well as balance of personal account where applicable. Information also includes various types/sources of income, and in cases a physical person owns a company, then company information must also be obtained. Once all required information is collected, the financial institutions forward this to the Cyprus Tax Department, which will in turn exchange information automatically with other countries in agreement with the C.R.S. annually.It remains to be seen in practice how effective the C.R.S. will be in terms of avoiding tax evasion. The first exchange of information is set to commence on September 2017.
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