FATCA Cyprus Reporting Agreement: The United States and Cyprus first entered into a Double Taxation Treaty in 1984 and then a FATCA Agreement (in substance) in 2014/2015. FATCA is the Foreign Account Tax Compliance Act. It requires each country to report account holders to the other country.
The purpose is to ensure that, for example, a U.S. person with foreign accounts in Cyprus a is properly reporting their foreign accounts to the U.S. government with the IRS tax return.
The overall goal of FATCA Cyprus is to minimize and eliminate offshore tax evasion between the two countries.
We will summarize the basics of the FATCA Cyprus Reporting Agreement.
Foreign Financial Institution (FFI) Requirements
Foreign Financial Institutions or FFIs are required to report U.S. account holder information to the U.S. government, and vice-versa.
For example, if Michael is a U.S. Legal Permanent Resident and has an account at Bank of Cyprus, then Bank of Cyprus is required to report the account holder information, balances, and other information to the IRS.
FATCA Cyprus U.S. Taxpayer Reporting
When a Taxpayer meets the FATCA Cyprus threshold requirement for FATCA, they are required to report the institution, balance and income information on Form 8938.
In addition, to the FATCA 8938 Form, Taxpayers may have other reporting requirements as well, including:
- FBAR (FinCEN Form 114)
- Form 3520
- Form 3520-A
- Form 5471
- Form 8621
- Form 8865
Taxpayer Non-Compliance with FATCA Cyprus
These penalties may be avoided and/or abated with voluntary disclosure or reasonable cause.
What is CRS?
CRS is the Common Reporting Standard. It is similar to FATCA, and sometimes referred to as GATCA (Global Account Tax Compliance Act). The CRS requirements are similar to FATCA, but the U.S. is not a part of CRS.
When a taxpayer receives a FATCA Letter, it is sometimes titled a FATCA CRS Letter.
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