The decree of 2015 in accordance with the Assessment and Collection of Taxes Law (Exchange of Information within the framework of the Agreement for the Foreign Account Tax Compliance Act) has been issued and published in the official Gazette of the Republic of Cyprus dated 28th August 2015 (Decree 281/2015) and is effective as of 31st August 2015.

Under the Decree, a Cyprus Financial Institution shall establish and maintain the required due diligence procedures as defined in Annex I of the Intergovernmental Agreement concluded between the Government of the United States of America and the Government of the Republic of Cyprus (the "Agreement"), in order to identify and report to the Cyprus Competent Authority any U.S. Reportable Accounts (i.e. accounts held by US Specified persons) and accounts held by Non-Participating Financial Institutions. It is also provided that a Cyprus Financial Institution or a Registered Deemed Compliant Financial Institution, other than completing its own due diligence procedures, may also rely on due diligence procedures concluded by third parties.

In relation to accounts which were opened on or after 1st July 2014 and before 1st January 2015, for which a self-certification document was not obtained, Cyprus Financial Institutions have the option to either close such accounts, or treat such accounts as U.S. Reportable Accounts.

In addition to the above, the Decree provides for, amongst others, definitions of controlling persons and reportable accounts (including a list of exemptions), the appropriate documentation that should be obtained in relation to the opening of new accounts for existing or new clients, as well as other obligations of Cyprus Financial Institutions under the Agreement.

Moreover, a Cyprus Financial Institution, must submit a return to the Cyprus Competent Authority until 31st August 2015 for the year 2014 and from 2015 onwards until the 30th of June of the calendar year that follows the end of each reporting year. For example, for the 2015 reporting year, a return must be submitted by 30th June 2016.

If during any calendar year a Cyprus Financial Institution does not hold any Reportable Accounts, it may submit a return to the Competent Authority stating this fact.

Any Cyprus Financial Institution that does not comply with its obligations under this Decree shall be subject to relevant penalties as provided in the Assessment and Collection of Taxes Laws of 1978 to 2015 as amended. These provisions do not apply to the 2014 reporting year.

The Decree also provides that any Cyprus Financial Institution may appoint a representative to perform its duties and obligations under the Agreement and the Decree. In such a case, a Cyprus Financial Institution should be in a position to provide, to the Competent Authority, if requested, all the relevant documentation which was used for the certification of its Reportable Accounts. A Cyprus Financial Institution will be liable for any act or omission of its representative to fulfil its obligations under the Agreement.

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.