Executive summary
The annual deadline for entities with the obligation to submit information to the Cyprus Tax Authorities as per the provisions of the CRS legislation is the 30th of June 2022 and is fast approaching.
In light of the ongoing impact of the COVID-19 pandemic on the way business is conducted in the 21st century, both the Organisation for Economic Co-operation and Development and the European Union are considering ways to expand their access to information that would be of interest to tax authorities of their Member States.
As a result, the Organisation for Economic Cooperation and Development has conducted a consultation on the introduction of a regime similar to the CRS in relation to crypto-assets, as well as proposed revisions to the existing CRS framework to include e-money providers and improve compliance.
In addition, the European Union is in the process of implementing the sixth amendment to the EU Directive 2011/16 on Administrative Cooperation, which will impose reporting obligations on digital platforms used for the provision of goods or services to end users within the European Union.
A brief overview of these developments is included below.
Detailed discussion
Deadline approaching for annual CRS Reporting by Reporting Financial Institutions in Cyprus
We would like to remind you that the annual deadline for entities with the obligation to submit information to the Cyprus Tax Authorities as per the provisions of the CRS legislation is the 30th of June 2022.
As a reminder, any information to be reported by 30 June 2022 relates to the reporting period 1st January 2021 to 31st December 2021.
OECD completes consultation process in relation to the inclusion of crypto-assets and e-money under the scope of the CRS
On 29 April 2022 a public consultation process was concluded by the Organisation for Economic Co-operation and Development (“OECD”) in relation to proposed changes to the scope of the CRS which include the following:
- Introduction of a Crypto-Asset Reporting Framework (CARF) that would bring cryptocurrency and other crypto-assets into scope for reporting. The obligation would largely fall on intermediaries which allow the exchange of crypto-assets into currency or other assets, facilitate reportable payments or allow for the transfer of crypto-assets.
- Revision of the existing CRS to include e-money providers, as well as revisions to the rules that are intended to improve compliance and reflect developments since the introduction of the CRS in 2014.
The OECD’s proposals for new rules are expected to be released in October 2022. There would need to be a new Multilateral Competent Authority Agreement (MCAA) to implement the CARF on a global basis which is likely to be published together with the proposals in October 2022.
Though a proposed timeline for adoption has not been indicated, there could be early adopting jurisdictions implementing the above proposals as early as the 1 January 2024.
Upcoming amendments to the EU Directive on Administrative Cooperation (DAC 7)
The seventh version of the EU Directive 2011/16 on Administrative Cooperation (“DAC 7”) will enter into force on 1 January 2023 and is expected to have significant impact on the digital platform economy.
These changes are expected to impact digital platforms that allow sellers to:
- Rent immovable property (e.g. short term accommodation)
- Provide personal services (e.g. ondemand household/professional services)
- Rent transport
- Sell goods.
Moreover, sellers who utilize such platforms to provide in-scope services should also be impacted.
Impacted platforms are expected to collect information similar to the information collected by Financial Institutions under current CRS legislation in relation to the sellers offering services on the platform. The information collected should be reported to the relevant competent authority of each EY Member States where the reportable seller is resident. The first reporting deadline is expected to be the 31st January 2024 in relation to information for the reporting period 1 January 2023 to 31 December 2023.
Our specialists in Automatic Exchange of Information regimes are at your disposal to discuss how the anticipated changes may impact your business.
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