The Ministry of Finance issued the Order (dated on the 31.12.2015) regarding the obligations of the Financial Institutions to follow the Common Reporting Standard (CRS), the specified procedures and to submit the relevant financial information to the tax authorities. The Directive 2011/16/EU governs the mandatory automatic exchange of information for tax purposes in all the EU member states.
Cyprus is expected to exchange information under the CRS for the first time in 2017 (regarding the collected data of 2016).
As a reminder "financial institutions, (including banks, forex companies, brokers, collective investment vehicles, insurance companies and others), in each participating country have to collect and transmit to the local tax authorities relevant information about their clients who are tax residents in another jurisdiction. The local tax authorities will then automatically exchange this information with the other participating countries." (further details in our related article: Automatic exchange of information for tax purposes.)
As far as the implementation of the CRS is concerned, the Organisation for Economic Co-operation and Development (OECD) had published a handbook with guidelines.
In a nutshell, the four steps that all the signatory countries have to take:
- Implement the reporting and due diligence requirements into the national legislation;
- Choose a legal basis for the exchange of information;
- Establish the administrative and technical infrastructure that is required for the collection and the exchange of the information;
- Ensure the protection of the confidentiality of the transmitted information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.