Standard for Automatic Exchange of Financial Information in Tax Matters (CRS)

Background:

For many years’ countries around the world have been engaging in the automatic exchange of information in order to tackle offshore tax evasion and other forms of non- compliance. After the OECD report to the G20 in Los Gabos CRS is widely practiced and is very effective tool to counter tax evasion and to increase voluntary tax compliance.

CRS can compare as FATCA of other countries than USA. For this reason if you are not USA citizen or you are not USA tax payer, offshore USA company ( ex-Delaware) will be very attractive. Please note that the Law is new to everyone and we do speculations to the Law. My decision was based on the table I state below.

How is work:

The reciprocal automatic exchange framework:

Standard for Automatic Exchange of Financial Information in Tax Matters. table

 

Which companies and What is Reportable:

For Cyprus Companies with bank accounts in Cyprus (reporting institution Cyprus Banks):

Companies with Active Income are NOT reportable. The definition of the active income has to do with regular business activities than the ones but not limited to Passive Incomes.

Companies with Passive Income are reportable. Passive Income are Dividends received, Bank Interest received, Rent Income Received, Royalties

From Wikipedia the definition of the Passive income is as follows:

Some examples of passive income are:

 

In Cyprus if the company has as business trading of shares and stocks then such income does not qualify as Passive. The same applies for companies that loan and receive loans. Also for companies that Royalties is the main income does not qualify as passive income.

Standard for Automatic Exchange of Financial Information in Tax Matters.table2

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