Cyprus Moves Forward With FATCA Compliance
The Inland Revenue Department of Cyprus (“IRD”) will proceed with the signing of Model 1 IGA (Inter Governmental Agreement) with the US Treasury, following the Foreign Account Tax Compliance Act (FATCA).
Model 1 IGA Reporting Requirements Explained
The Model 1 IGA requires Foreign Financial Institutions (FFIs) to report all FATCA-related information to their own governmental agencies, which then report this information to the IRS. Some Model 1 IGAs are reciprocal, requiring the U.S. to provide certain information about residents of the Model 1 country to that respective country in exchange for the information that country provides to the U.S. An FFI covered by a Model 1 IGA is required to register on the IRS’s FATCA Registration Portal.
Differences Between Model 1 and Model 2 IGAs
The Model 2 IGA requires FFIs to report information directly to the IRS of the US government. At this stage only Japan and Switzerland have entered into this model. Under this model, FFIs will need to register with the IRS, and certain FFIs will need to sign an FFI agreement adapted to reflect the IGA.
Implementation Timeline and Next Steps
The IRD in Cyprus has filed all required information to the US government for the signing of the agreement, which is expected to be finalised within a month. FFIs will then have to register with the IRS by December 31st, 2014.
