The Standard has been initiated by the Organization for Economic Cooperation and Development (OECD) aiming at improving international tax compliance and preventing tax evasion, through the automatic exchange of information between the countries that implement CRS.
CRS has been implemented at the European Union level through the Directive that relates to the mandatory automatic exchange of information in the field of taxation (Directive 2014/107/EU).
In late 2015 the Cyprus Ministry of Finance issued a Decree implementing the Organisation of CRS.
The CRS, which applies to both individuals and entities, is applied by all authorized credit institutions and other financial institutions who are located in countries that apply CRS. For the purpose of identifying tax residence, the financial institutions are required to obtain from the direct and indirect account holders, self-certifications which include the country(ies) of tax residence and the tax identification number(s).
The Decree sets out the framework for financial institutions operating to collect/review information from their clients and investors regarding tax residence, and to forward prescribed information to the national tax authorities for disclosure to relevant overseas tax authorities. For new customers as from 1 January 2016, the member banks of the association are required to ask and receive information relating to the country(ies) of tax residence and, for non-Cyprus tax residents, relating to the tax identification number(s). For pre-existing customers, member banks of the association may contact the persons affected by CRS, to collect a self-certification form which will determine their residence(s) for tax purposes and provide their tax identification number(s). Without a self-certification, the financial institutions are obliged to consider the account holder as a reportable person.