FATCA/CRS
FATCA
The Foreign Accounts Tax Compliance Act ("FATCA") is a U.S legislation that was enacted by U.S. Congress in March 2010 and came into force in July 2014. Its aim is to detect, deter and discourage offshore tax evasion by U.S. citizens or residents, who either directly or indirectly, invest outside the U.S. through foreign financial institutions.
Intergovernmental Agreement (IGA)
Several countries (including Cyprus, UK and Channel Islands) signed an Intergovernmental Agreement with the USA ("IGA"), in order to facilitate the implementation of FATCA provisions by Financial Institutions (FFIs) in their jurisdictions.
Impact on The Cyprus Investment and Securities Corporation Ltd and its customers
The Cyprus Investment and Securities Corporation Ltd ("CISCO") is committed to comply fully with relevant FATCA legislation, regulations, guidelines, and best practices. CISCO is therefore required to:
⦁ register with the US IRS (registered as Model 1 IGA FFI - GIIN: M48NAV.00009.ME.196)
⦁ perform specific due diligence procedures to identify U.S. accounts (that is, accounts maintained by U.S. citizens or residents) and report these accounts on an annual basis to the Cyprus Tax Authorities, which will in turn forward them to the U.S. Tax Authorities.
From 5 December 2014 (when the IGA came into force), when opening a new account, CISCO requests additional information and documentation from customers to determine:
⦁ whether the account holder is a US person or
⦁ an entity account holder's FATCA classification status.
CISCO is also reviewing existing customers (opened prior to 5 December 2014) to identify that US individual accounts and entity accounts are correctly identified in CISCO's systems and reported where required. In some cases, further information, and documentation are requested from customers.
From August 2015, CISCO is required to annually report to the Cyprus Tax Authorities information concerning the accounts of US persons, non-compliant account holders and certain US owned entities. It is therefore important that clients respond when requested by CISCO to provide the relevant tax information.
Further information regarding FATCA can be found in the websites of the:
⦁ Bank of Cyprus Public Company Ltd at www.bankofcyprus.com
⦁ Association of Cyprus Banks at www.acb.com.cy
⦁ U.S. IRS at www.irs.gov/fatca
In case there are further queries regarding FATCA or local legislation, or FATCA classification, clients are advised to contact a professional tax advisor, as CISCO is unable o provide tax advice.
CRS
The environment for tax reporting between international jurisdictions has undergone significant changes in a global effort to improve tax transparency. An example is the Foreign Accounts Tax Compliance Act (FATCA) imposed by US starting in 2014. Drawing extensively on FATCA, the OECD Common Reporting Standard (CRS) is a further international initiative and is based on the development of a single global standard for the automatic exchange of information between tax authorities.
As of December 2015, several jurisdictions (including Cyprus) have adopted CRS, of which the most jurisdictions have signed a Multilateral Competent Authority Agreement and the number is constantly increasing. A full list of the committed participating jurisdictions can be found here. The Cyprus Government, as well as another 57 jurisdictions, agreed to early adoption of the CRS and undertook the necessary CRS obligations from 1st January 2016 (reporting starting in 2017).
How this affects you
Since Cyprus is an early adopter, starting 1st January 2016 all local Financial Institutions, including The Cyprus Investment and Securities Corporation Ltd ("CISCO"), need to comply with the requirements of the CRS by contacting customers (gradually during 2016) to collect certain information. Specifically, the collection of information affects:
⦁ holders of new accounts opened on or after 1st January 2016 and
⦁ certain holders of pre-existing accounts i.e., accounts which were in existence on 31 December 2015.
This information will consist of their Jurisdiction(s) of Tax Residence and Tax Identification Number (TIN), among other fields where applicable, in the form of a self-certification. Accounts held by CISCO that fall within the scope of a Reportable Account in the CRS, will be subject to reporting on an annual basis.
Our commitment to you
CISCO is commited to comply with this requirement and collect relevant information with a minimum burden on our customers. CISCO is unable to comment on an account holder's tax position and you may need to consider professional advice if you are unsure of your personal tax circumstances.