Cyprus Withdraws the 2017 ASP Guide on FATCA and CRS - Paragraph 10ter Now Decides Who Is a Financial Institution

On 17 September 2026 the Cyprus Tax Department announced that the guide "Cyprus Administrative Service Providers (ASPs) Are They FIs under FATCA and CRS (June 2017)" is repealed and ceases to apply from the date of the announcement. There is no transitional period. Organisations are told not to rely on it when interpreting or applying their obligations under the Common Reporting Standard.

What replaces it

The Department directs organisations to paragraph 10ter of the Consolidated Text of the CRS (2025). In plain terms, for the purposes of the gross income test all remuneration for an entity’s relevant activities is taken into account, whether or not that remuneration is paid directly to the entity being tested.

The example the Department reproduces is the one that will catch most Cyprus structures. An accounting or law firm sets up a trust for a client and, as part of that process, appoints a corporate trustee. The client pays the firm a single fee for the whole package, including the trustee services. The corporate trustee itself never invoices anybody. That remuneration still counts towards the gross income test. The same logic applies where an entity provides custodial services but the fees for those services are paid to another entity.

The May 2020 Guidance Notes

The Department also confirms that the related references in the Guidance Notes on the Automatic Exchange of Financial Account Information (May 2020) do not apply and will not be applied from the date of the announcement. Those notes are to be updated so that they absorb the changes arising from the amended CRS.

Audits and penalties

The announcement closes by reminding organisations that the Tax Department may carry out audits to establish whether reporting organisations comply with their CRS and DAC2 obligations, and that where non-compliance is established — including incorrect or late submission of the required information, or failure to apply the prescribed due diligence procedures — it may impose the administrative sanctions provided for in the applicable legislation. The announcement specifies no amounts, so none should be assumed.

What I would do this week

If your group contains a corporate trustee, a nominee company, or any entity whose fees are collected somewhere else in the structure, its Financial Institution classification needs re-testing now rather than at the next reporting deadline. The 2017 guide is gone, and the test that matters is the one in paragraph 10ter.

Source: Tax Department announcement of 17 September 2026, published on gov.cy.

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