Cyprus: Filing of FATCA Nil Reports Is Not Required
The Cyprus Tax Department announced that Financial Institutions which report information to the Cyprus tax authorities under the Cyprus – United States Foreign Account Tax Compliance Act (FATCA) Agreement will not be required to file nil returns.
The FATCA Agreement between Cyprus and the United States was signed on 2 December 2014.
FATCA seeks to obtain information on accounts held by U.S. taxpayers in other countries. It requires U.S. financial institutions to withhold a portion of certain payments made to Foreign Financial Institutions (FFIs) who do not agree to identify and report information on U.S. account holders. Governments have the option of permitting their FFIs to enter into agreements directly with the IRS to comply with FATCA under U.S. Treasury Regulations or to implement FATCA by entering into one of two alternative Model IGAs with the United States.
More specifically, Cyprus and the United States signed a Model 1 Agreement. Under this agreement, FFIs in Cyprus will report the information required under FATCA about U.S. accounts to the Cyprus Government, which in turn will report the information to the IRS. This agreement is reciprocal, meaning that the United States will also provide similar tax information to the Cyprus Government regarding individuals and entities from Cyprus with accounts in the United States.
