Globalserve – Cyprus Company Formation – бизнес на кипре
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The international tax environment is changing into an entirely new one with transparency and substance being the main pillars of the new system, in a global effort to improve tax transparency and reduce tax shifting to lower tax jurisdictions.

Pioneers in this were the USA with the introduction in 2014 of FATCA (Foreign Accounts Tax Compliance Act) under which financial institutions are obliged to report to the USA tax authorities the accounts maintained by USA citizens with them.



Now in 2016, the OECD introduces the Common Reporting Standard (CRS) (formally referred as the Standard Automatic Exchange of Financial Account Information), also known as GATCA ie Global Act Tax Compliance Act, which requires banks and other financial institutions to automatically exchange information relating to bank and custody accounts belonging to foreign tax payers in order to ensure that they pay taxes in their country of residence on income and assets.

So far 96 jurisdictions including Cyprus have signed the Multilateral Competent Authority Agreement and have adopted CRS, and the number is constantly increasing, out of which 57 jurisdictions including Cyprus are early adopters, reporting in 2017 based on year end balances as at 31.12.2016. The second group of companies will start reporting in 2018 based on 2017 balances including Switzerland, Russia, Belize, UAE, Hong Kong etc.

Cyprus has introduced the relevant legal framework and the CRS starting point in Cyprus is the publication of the protocol on 31st December 2015 the major features of which are outlined below:

Financial institutions include but are not limited to banks, insurance companies, custodians, brokers and Collective Investment Vehicles. The financial institutions will send the information to their tax authorities which will forward it on to the competent tax authorities in the partner countries.

Information to be included is yearend bank account balances and income in respect of any payments through the account such as interest earned, dividends, funds from insurance companies, income earned from assets and sale profits of financial assets.


Reportable bank accounts are those relating to:

– individuals pre-existing or new depository accounts without any minimum threshold.

– legal entities accounts whose income is passive specifically more than 50% of their income is passive income and more than 50% of assets relate to generation of passive income.

– Preexisting passive income entities accounts below €250.000 are not reportable

– Active income companies’ accounts are not reportable


Information on each reportable person includes name, address, country of residence, national insurance and tax identification numbers, place and date of birth. Financial institution will need to disclose not only the account holder but also any beneficial owners, controlling persons.


Actions by Cyprus banks

As a result of the CRS and since Cyprus is an early adopter, starting 1.1.2016, all financial institutions in Cyprus are working to comply with the CRS requirements by updating the information on the companies activities and the tax residency of the company and its owners, by obtaining their Tax Identification Numbers (TIN)

The collection of information will affect:

– Holders of new accounts opened on or after 1.1.2016 (No account will be opened without giving the TIN)

– Certain holders of pre-existing accounts ie accounts which were in existence on 31.12.2015

– The collection of information will depend on self certification


Key dates for early adopters:

Key dates for early adopters Description
1st January 2016 New account opening procedures to record tax residence must be in place
31 December 2016

Deadline to complete due diligence for identifying high-value pre-existing individual accounts

March 2017 First CRS reporting towards tax authorities
September 2017

Exchange of information between competent authorities commences

31st December 2017 Deadline to complete due diligence for identifying low-value pre-existing individual account holders and entity accounts holders

For further information and clarification, you can contact with Globalserve Consultants Ltd


Tel: 00357 25 817181   Fax: 00357 25 824055

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