Financial affairs and data exchange

Exchange of information and living in Cyprus.
Are your financial affairs in order?
Automatic exchange of information is almost here. Data will start being collected from next year. What does it mean for you, as an expatriate living in Cyprus?
For example, if you have ISAs, or a UK rental income or an offshore bank account, the Cyprus tax authorities will be advised.
This will include your name, address, tax identification number and the account and income details.
The information to be exchanged includes account balances, interest, dividends and sales proceeds from financial assets. This covers entities like trusts as well as individuals.
Information will be exchanged by countries across the world under the Organisation for Economic Co-operation and Development's (OECD) Common Reporting Standard. The 'early adopters' group, which includes Cyprus along with the rest of the EU, start sharing information in 2017. However they start collecting data next year. Other jurisdictions join the following year.
It is essential you understand which assets and income need to be declared in Cyprus.
ISAs are taxable in Cyprus and so need to be declared. Rental income from the UK should also taxed here, even if you have declared it in the UK. For Cyprus residents, worldwide rental income is taxed at the scale rates of tax (on net income), plus 3% defence contribution on 75% of the gross income.
Many British expatriates living here do not realise that they need to pay Cyprus tax on their UK ISAs and rental income. When exchange of information starts, the Cyprus tax authorities will be able to compare the data received with your tax returns. If you have been getting this wrong you need to regularise your position by the end of this year. Please contact a financial adviser or a tax specialist for clarification.
Exchange of information does not mean that you do not have the right to structure your assets in the most tax efficient way, but you have to ensure you only use arrangements which are compliant in Cyprus. There are structures which can be very effective, but please take specialist advice to make sure you get it right.......