The Organisation for Economic Cooperation and Development (OECD) has advanced the development of a standard that defines the Common Reporting Standard (CRS) – Automatic exchange of information among member countries (including Cyprus as a member). The Common Reporting Standard (CRS), requires the automatic exchange of information on financial accounts that are held, directly or indirectly, by account holders who are tax residents of countries that implement CRS. The objective of establishing the Common Reporting Standard was to reduce and ultimately eliminate tax evasion by requiring financial institutions to automatically share information with the tax authorities in each country.
What information will be exchanged under CRS reporting in Cyprus?
Information is exchanged on interest, dividends, bank balances, income from certain insurance products, revenue from the sale of financial assets, and other income or payments
Who is responsible for providing the information for Cyprus CRS reporting purposes?
Cyprus banks and branches of foreign banks, Cyprus financial intermediaries, Cyprus collective investment funds, insurance companies, trusts – financial forms, etc
How is the CRS reporting performed in Cyprus and in other Member States?
The information is sent to the Cyprus tax authorities and the Cyprus tax authorities send the information to the tax authorities in the country of tax residence of the relevant individual or entity
Who is affected under CRS Cyprus reporting?
– Cypriot entities receive passive dividend income, interest, royalties, etc. from the account. Reporting is made irrespective of any amount (other than non-financial entities and listed companies)
Individuals irrespective of any amount
Entities excluded from the CRS reporting in Cyprus – Automatic exchange of information
– Cyprus entities carrying out commercial (active) activities like trading in products, provision of services, etc. including entities that hold shares in subsidiaries that carry out commercial activities
– If less than 50% of Cyprus entities’ gross income is passive income and less than 50% of the assets held are assets that produce or are held for the production of passive income
– Beneficiaries owning or controlling 25% or less in a Cyprus entity
Note: US persons are not subject to the Common Reporting Standard. The US adopted FATCA which operates on a similar basis
How certification of accounts is performed under CRS reporting in Cyprus?
Self-certification is performed by the account holder and is only valid if it is signed (or otherwise positively confirmed) by the account holder, and contains: name, home address, the state of tax residence, tax identification number, and date of birth
For Cyprus private entities
Self-certification is performed by the information available to the public and by a person who has the ability to exercise control over the entity, and is valid only if it is signed (or otherwise positively confirmed) by that person or by proxy of the same and contains: the name, address, state of tax residence, the number of tax residence and date of birth
Information is given to other OECD countries under CRS reporting in Cyprus
For individuals and entities that have the ability to exercise control over an entity, self-certification data is disclosed
For Cyprus entities having passive income activities, the state of tax residence and tax identification number are disclosed. For entities having passive income activities, reference is given to natural persons who exercise control over the entity even if they reside in the same country as the entity’s base
Other means of exchanging information between countries:
– Double taxation avoidance treaties between countries followed by a special request of the other country’s tax authorities. (The Common Reporting Standard – automatic exchange of information outbalances treaties)
– Bilateral agreements between countries to exchange information followed by a specific request of the other country’s tax authorities
– EU Directive on Administrative Cooperation in the field of taxation for the Member States which is similar to that of the Common Reporting Standard – Automatic exchange of information
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