Cyprus Tax Department Withdraws 2017 ASP FATCA/CRS Guidance: Key Implications for Service Providers

On 17 September 2026, the Cyprus Tax Department announced the withdrawal of its June 2017 guidance, “Cyprus Administrative Service Providers (ASPs) – Are They FIs under FATCA and CRS”.

The withdrawal changes how Administrative Service Providers (ASPs) must assess their classification as Financial Institutions (FIs) under the OECD Common Reporting Standard (CRS). Affected entities should review their existing classification, reporting procedures and compliance arrangements in light of the updated requirements.

What Has Changed?

ASPs can no longer rely on the 2017 guidance when interpreting or applying their CRS obligations. References to the withdrawn document in the Cyprus Tax Department’s May 2020 Guidance Notes on the Automatic Exchange of Financial Account Information are also no longer applicable.

The Guidance Notes are expected to be updated to reflect the latest version of the CRS.

Going forward, ASPs must determine their CRS classification by reference to:

• Paragraph 10ter of the Consolidated Text of the CRS (2025);
• The applicable Cyprus CRS legislation and regulatory framework.

Paragraph 10ter: A Broader Gross Income Test

Paragraph 10ter clarifies how remuneration must be considered when applying the gross income test used to determine whether an entity qualifies as a Financial Institution under the CRS.

Under the clarified approach, all remuneration attributable to relevant activities must be taken into account, regardless of whether it is received by the entity performing those activities or by another entity.

This effectively removes the “non-attribution” principle reflected in the 2017 guidance.

For example, where an entity provides trustee or nominee services but a related company invoices and receives the corresponding fees, those fees must still be considered when assessing the service provider’s CRS classification.

Consequently, the use of separate or related entities to receive remuneration does not, in itself, exclude that income from the gross income test.

Which Entities May Be Affected?

The withdrawal may have implications for a range of businesses and structures, including:

• Administrative Service Providers and their subsidiaries acting as corporate trustees, nominees or custodians.
• Law firms and accounting firms that provide trustee or nominee services through related entities.
• Trusts and companies whose FATCA/CRS classification depends on the status of their service providers.

Entities that previously relied on the 2017 guidance, particularly those applying the non-attribution principle, should reassess whether their existing CRS classification remains appropriate.

CRS Compliance, Audits and Administrative Penalties

The Cyprus Tax Department has indicated that it may conduct audits to verify compliance with CRS and DAC2 obligations.

Where non-compliance is identified, the Department may impose administrative penalties предусмотрed by applicable law. Potential compliance issues include:

• Incorrect or incomplete CRS reporting;
• Late submission of reporting information;
• Failure to perform the required due diligence procedures;
• Incorrect classification of an entity for CRS purposes.

The withdrawal of the 2017 guidance therefore warrants a review not only of entity classification but also of existing reporting and due diligence procedures.

Recommended Actions for ASPs

ASPs and other potentially affected entities should consider taking the following steps:

1. Review CRS classification: Reassess the entity’s status under paragraph 10ter of the 2025 CRS text and the applicable Cyprus legislation.
2. Reassess relevant income: Identify all remuneration attributable to trustee, nominee, custodial, and other relevant activities, including fees received by related entities.
3. Review existing structures: Examine arrangements involving subsidiaries, affiliated companies, and other entities that receive fees for services performed by the reporting entity.
4. Verify reporting obligations: Determine whether the revised classification affects CRS due diligence, reporting, or registration requirements.
5. Address potential discrepancies: Where the review identifies incorrect classifications or reporting practices, assess the appropriate corrective measures.

Conclusion

Removing the 2017 notice has definitely clarified what Cyprus ASPs must do when it comes to classifying taxpayers for CRS purposes. Therefore, it is a good idea for a company to do the following: a) recalculate gross income; b) look closely into all transactions between its related parties; and c) check what it needs to report in the context of the current CRS system so it can maintain a good relationship with the regulator and at the same time avoid any kind of regulatory risks.

1. Hadjivangeli & Partners LLC provides legal and regulatory guidance to businesses operating in Cyprus. Entities affected by the withdrawal should seek advice tailored to their specific corporate structure and CRS obligations.

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This article is for informational purposes only. It does not constitute legal, tax, or financial advice and should not be treated as a substitute for professional consultation. Readers should seek guidance from our qualified professionals before taking action.