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Common Reporting Standard
Common Reporting Standard (CRS) was developed by the Organisation for Economic Co-operation and Development (OECD), having been endorsed to do so by G20 Leaders at their meeting in Russia in September 2013, as a global model of automatic exchange. The idea is that one country will collect information from their financial institutions and automatically exchange this information with other countries on an annual basis.
Many reputable jurisdictions around the world, including Cyprus, are set to implement the OECD CRS, in either 2017 for early adopting countries, or in 2018, by automatically reporting financial account information on all non-tax resident individuals, entities and beneficial shareholders of those entities to their respective tax residence country.
Cyprus, along with another 55 jurisdictions, including the UK, the BVI, Seychelles and Luxembourg, has opted to report in 2017 financial account information that existed in 2016.
As per the OECD, the standard consists of two components:
a) the CRS, which contains the reporting and due diligence rules; and
b) the Model Competent Authority Agreement (CAA), which is the agreement between the countries that will contain the detailed rules on the exchange of the information.
To prevent circumventing the CRS, it is designed with a broad scope across three dimensions:
a) The financial information to be reported with respect to reportable accounts includes all types of investment income (including interest, dividends, income from certain insurance contracts and other similar types of income) but also account balances and sales proceeds from financial assets.
b) The financial institutions that are required to report under the CRS do not only include banks and custodians but also other financial institutions such as brokers, certain collective investment vehicles and certain insurance companies.
c) Reportable accounts include accounts held by individuals and entities (which includes trusts and foundations), and the standard includes a requirement to look through passive entities to report on the individuals that ultimately control these entities.
The CRS also describes the due diligence procedures that must be followed by financial institutions to identify reportable accounts.
In August 2015, the OECD published The CRS Implementation Handbook to assist government officials in the implementation of the standard.
Jurisdictions undertaking first exchanges by 2017:
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Curaçao, Cyprus, Czech Republic, Denmark, Dominica, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mauritius, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos Islands, United Kingdom