COMMON REPORTING STANDARDS

Common Reporting Standards (CRS) refer to the automatic exchange of information between countries as to the ultimate beneficial owners (UBOs) of bank accounts. 

 

For many years, tax evasion was possible because funds could be held in an offshore account without being reported to the tax authorities where the account holder was resident. 

 

This applied to companies as well as to individuals.

 

In order to combat this trend, the Organisation for Economic Cooperation and Development (OECD) was tasked, in 2012 and 2013, for developing an international standard for Common Reporting Standards. 

 

This materialized in 2014 with the launch of the Automatic Exchange of Information (AEI) standard. The AEI Standard was adopted by the G20 and then successively by over 100 countries. The complete list of countries that have implemented it can be found here: http://www.oecd.org/tax/transparency/AEOI-commitments.pdf

 

AEI includes:

 

  1. A common standard for due diligence and reporting of information;

  2. A legal and operational basis for the exchange of information;

  3. A set of common or compatible technical solution for the exchange of information. 

 

Today, all financial institutions in Cyprus implement Common Reporting Standards. This includes: 

 

  1. Reporting information on account holders from the bank to the Cyprus tax authority.
     

  2. The Cyprus tax authority will, upon request, share that with other jurisdictions, providing only the list of account holders of citizens of that jurisdiction to the jurisdiction. 

 

The information shared is:

 

  • The name of the account holder

  • The citizenship of the account holder

  • The date and place of birth of the account holder

  • The tax identification number of the account holder

  • The tax residency of the account holder

  • The controlling persons (in the case of a corporate entity)

  • The gross amount of interest paid on the deposit account

  • The gross amount of dividends paid

  • The gross amount paid from the sale of an asset

  • The account balance on the reporting date.

 

The value of this information for a tax jurisdiction is obvious: it is used to check the assets declared by companies and individuals in that jurisdiction. 

 

Common Reporting Standards effectively ends banking secrecy. Over 100 countries have signed up for it, including Switzerland, Guernsey, Jersey, the UK, Seychelles, Isle of Man, Bermuda, British Virgin Islands, Cayman Islands and Gibraltar. 

 

NavInvest Cyprus supports investors in Cyprus optimize and enhance their management structures, corporate governance, financial reporting and general operations. For more information, please contact us.