AEOI - Automatic Exchange of information

INFORMATION 4/2015

Automatic Exchange of Financial Account Information

The purpose of this newsletter is to inform you about the OECD / EU Directives regarding Automatic Exchange of Financial Account Information between countries.

The first exchange of information is expected to be made as from 2017 (in respect of year 2016) on an annual basis between participating countries in relation to all accounts that are considered reportable.

Each country will need to translate the requirements of the common reporting standard (CRS) into local Law. It is expected that the participating countries will have to sign a bilateral agreement in order to be able to apply the common reporting standards between them.

Cyprus has not as yet passed such a Law and has not yet signed any such bilateral agreements with any country.

Reporting financial institutions

Financial Institutions resident in the state or having a branch in a participating country are required to report to their local tax authorities relevant information about their clients who are tax residents (and in certain cases for domiciled persons) in another participating country. These are classified as:
• Custodial institutions (holds assets for the account of others)
• Depository institutions (an entity which accepts deposits in the ordinary course of banking or similar business)
• Investment entities (on behalf of customers involved in trading in monetary market instruments, foreign exchange currency, individual and collective portfolio management and investing/administering/managing financial assets on behalf of other persons)
• Specified insurance companies (an insurance company that issues or it is obligated to make payments with respect to insurance contracts)

Reportable persons

• An individual resident in another state
• An entity (including funds and foundations) in which controlling parties are resident in another state. Financial institutions will need to disclose not only the account holder but also any beneficial owners, controlling persons and is some cases "relevant persons" of entities and trusts.
It excludes public listed companies and financial institutions.

The information on each reportable person generally includes
• Name
• Address
• Country of residence
• Tax Identification Number
• Place and date of birth
• Account number

Reportable accounts

1. All new accounts (opened 1 January 2016 and onwards) for individuals and entities
2. Pre-existing accounts (i.e. bank accounts that already exists as at 31 December 2015) for individuals/entities which will be classified as reportable by the reporting financial institution after a review.

Review of pre-existing individual accounts must be completed by 31 December 2016 for high value and by 31 December 2017 for low value.

Review of pre-existing entity accounts which exceed the threshold of US$250.000 must be completed by 31 December 2017.

Pre-existing entity accounts with an aggregate account balance or value that as at 31 December, 2015 does not exceed the amount of US$250.000 (or the equivalent of this) will not be classified as reportable account unless the financial institution elects otherwise (In Cyprus it is very unlikely that any financial institution will elect otherwise) If in any subsequent year such account exceeds the threshold of US$250.000 it must be reviewed by the financial institution within the calendar year following the year in which the aggregate account balance or value exceeds the threshold of US$250.000 and classified accordingly.

Financial information

Financial information to be reported include
• accounts balances or values
• total gross interest received
• total gross dividends
• income from certain insurance products
• total gross proceeds from the sale of financial assets
• total gross amount paid/credited to the account

The exact nature of information to be exchanged between each participating country and one other country it is expected that this will have to be agreed / defined in a separate bilateral agreement between the two countries.

Participating countries

 Undertaking first Automatic Exchange of Information by 2017 in respect of 2016 information

Anguilla, Argentina, Barbados, Belgium, Bermuda, Bulgaria, British Virgin Islands, Cayman Islands, Colombia, Croatia, Curacao, 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, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Trinidad and Tobago, Turks and Caicos, Uruguay, United Kingdom.

 Undertaking first Automatic Exchange of Information by 2018 in respect of 2017 information

Albania, Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Belize, Brazil, Brunei Darussalam, Canada, Chile, China, Costa Rica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Marshall Islands, Macao (China), Malaysia, Monaco, New Zealand, Qatar, Russia, Saint Kitts & Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, Saint Marten, Switzerland, Turkey, United Arab Emirates, Uruguay.

Countries that have indicated interest but without commitment yet

Bahrain, Cook Islands, Nauru, Panama, Vanuatu

We will continue to follow up on any new developments on the above and meantime if you need any further clarifications or seeks any assistance or / advice should contact our office.

PEK LTD
November 2015

Disclaimer

This newsletter has been prepared as a general guide and for information purposes only. It is not a substitution for professional advice. One must not rely on it without receiving independent advice based on the particular facts of his/her own case. No responsibility can be accepted by our firm or our staff for any loss caused by acting or refraining from acting on the basis of this newsletter.

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