The Multilateral Competent Authority Agreement for the Automatic Exchange of Financial Information in Tax Matters, which was concluded on 29 October 2014 by the contracting parties of the Global Forum of the Organization for Economic Co‑operation and Development (OECD), states the commitment of the contracting parties to the new international standard for the automatic exchange of financial information in tax matters. The Common Reporting Standard (CRS), formally referred to as the Standard for Automatic Exchange of Financial Account Information is implemented at EU level via the Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation, as amended.
Based on the above, and in order to transpose the Standard’s requirements into the domestic legislation of Cyprus, a Decree was published on 31st December 2015, in accordance with the provisions of Article 6(16) of the Assessment and Collection of Taxes Law of 1978 to 2015. The Decree entered into force on 1st January 2016.
The Decree provides guidance as to the types of accounts, as well as the physical or legal persons, which fall within its scope. In accordance with the Decree, those institutions that fall with the definition of a “financial institution” are required to set out the appropriate controls and procedures in order to identify, collect and report information of account holders. The term “financial institutions” includes:
As aforementioned, the Decree also sets out the required due diligence procedures that such financial institutions are required to undertake in respect of pre-existing and new account holders, in order to identify their tax residency, and where applicable, identify and disclose the controlling persons of account holders that are legal entities falling within the definition of a passive non-financial entity.
Under the Decree, the information to be reported concerning account holders of financial institutions includes their name, address, residence for tax purposes, tax identification number, date and place of birth. Moreover, information regarding the financial accounts balances and any income relating to these accounts, such as interest, dividends, income from certain insurance products, as well as the gross sale proceeds of any financial assets should also be reported.
The information must be submitted to the Cyprus Tax Department on an annual basis by the 30th June of each year following the end of the calendar year that the information relates to. Subsequently the Cyprus Tax Department will exchange such information with the relevant competent authorities by 30th September of the same year. Therefore, the first exchange of information is expected to take place during 2017 and will relate to financial information for year 2016.
You may access the Decree in Greek here.
All content prepared by KPMG Cyprus.