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Cyprus reporting rules and U.S. trust forms

Cyprus information exchange and trust register rules sit alongside IRS reporting forms relevant to U.S. persons connected with foreign trusts. For a U.S. citizen, the applicable IRS reporting depends on the relationship with the trust and related accounts.

Cyprus financial account information exchange

Cyprus describes the Common Reporting Standard as part of automatic exchange of financial account information. Cyprus signed the Multilateral Competent Authority Agreement for automatic exchange.[6]

Not every trust or account is reportable under the exchange framework.[6]

Cyprus has a Model 1 FATCA intergovernmental agreement with the United States, and that agreement is in force.[2]

Trust beneficial ownership registers

CySEC says it establishes and maintains a register for express trusts, similar legal arrangements and their beneficial owners. The CyTBOR system is the means through which the register is kept, and it handles submission and updating of information as well as access to the register.[7]

Specific trust information is submitted to the Registrar when a trust is the final beneficial owner. The required information includes the trust name and jurisdiction, plus a list of natural persons by role. These roles include settlor, trustee and beneficiary. For a Cyprus jurisdiction trust, the first three listed role categories are mandatory; for a trust outside Cyprus, at least one listed category must be completed.[8]

The listed fields also include a registration number, if any, and a person exercising ultimate control. These fields form part of the beneficial owner information for the Registrar's entity register, which is separate from the CySEC register of express trusts and similar arrangements.[8]

IRS reporting for U.S. persons and foreign trusts

IRS materials say that a U.S. person includes a U.S. citizen, and that information reporting rules can apply when a person transacts with a foreign trust, is treated as its owner, or receives a distribution. The IRS lists Forms 3520 and 3520-A, Form 8938, and FinCEN Form 114, known as the FBAR, among potentially related filings.[4]

Form 3520

The IRS says Form 3520 generally applies to a U.S. person who creates or transfers money or property to a foreign trust, receives a distribution or certain trust benefits, or is treated as the trust's U.S. owner. Form 3520 has separate parts for transfers and U.S. ownership. Other parts cover distributions and certain gifts or bequests, so relevant reporting depends on the event and the person's status.[4]

A U.S. person receiving a distribution from a foreign nongrantor trust generally reports a share of distributable net income, according to the IRS summary. Depending on whether the trust is grantor or nongrantor, the beneficiary statement may provide information on distribution tax treatment; the Form 3520 instructions address reporting when no statement is received.[4]

Form 3520-A

The IRS states that U.S. persons treated as owners under grantor trust rules must ensure that the foreign trust files a complete Form 3520-A and provides annual statements to its U.S. owners and beneficiaries. If the trust does not file, the U.S. owner completes and attaches a substitute Form 3520-A to the owner's timely Form 3520, and provides required annual statements.[4]

Form 3520-A is an annual information return for a foreign trust with a U.S. owner. The owner statement includes information about trust income for the U.S. owner's income tax return, according to the IRS summary.[4]

Form 8938 and FBAR

The IRS identifies Form 8938, Statement of Specified Foreign Financial Assets, and FinCEN Form 114, Report of Foreign Bank and Financial Accounts, as filings that may also be required. A Form 3520 filer may also have to file either form, depending on the applicable thresholds and account conditions.[5]

These forms address reporting obligations that may accompany foreign trust transactions, ownership or distributions involving U.S. persons. Not every U.S. beneficiary or owner is required to file all four forms in every case.[4]

Questions and answers

What does Cyprus describe as its CRS framework?

The Tax Department describes the CRS as automatic exchange of financial account information. Cyprus signed the Multilateral Competent Authority Agreement for that exchange.[6]

What FATCA agreement status does Treasury list for Cyprus?

The Treasury table lists Cyprus as In Force under Model 1.

What trust information does the Cyprus FAQ describe?

The Registrar requires the trust's name and jurisdiction, plus the natural persons associated with specified roles. For Cyprus jurisdiction trusts, the first three role categories are mandatory.[8]

When does the IRS say Form 3520 can apply?

The IRS says Form 3520 generally applies to certain transfers to a foreign trust, distributions or trust benefits received, and U.S. ownership under grantor trust rules. Reporting depends on the event and the person's status.[4]

What does the IRS say about Form 3520-A?

A U.S. person treated as an owner under grantor trust rules must ensure that the foreign trust files Form 3520-A and furnishes annual statements. If the trust does not file, the U.S. owner attaches a substitute Form 3520-A to the owner's Form 3520.[4]

Can Form 8938 or FBAR also relate to a foreign trust?

Yes. IRS materials list Form 8938 and FBAR among reports that may apply in connection with foreign trust transactions, ownership or distributions. Whether either form applies depends on the relevant reporting requirements.[4]

Related glossary terms

  • FBAR: FinCEN describes the FBAR filing rule for U.S. persons with foreign accounts. It covers the $10,000 aggregate threshold, account interests and exceptions.
  • Foreign financial account: Form 8938 treats an account outside the United States as a specified foreign financial asset. FBAR rules identify reportable accounts by type and location.
  • Section 6048: Section 6048 sets information reporting rules for certain foreign trusts. Its parts cover notice of events, U.S. owner duties and beneficiary distributions.

Related articles and guides

Tools and official documents

Sources and data notes
  1. Cyprus Securities and Exchange Commission, ASP (Fiduciary Services). https://www.cysec.gov.cy/en-GB/legislation/services-markets/asp/. Retrieved .
  2. U.S. Department of the Treasury, Foreign Account Tax Compliance Act: agreements and understandings by jurisdiction. https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act. Retrieved .
  3. Internal Revenue Service, United States income tax treaties, A to Z. https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z. Retrieved .
  4. Internal Revenue Service, Foreign trust reporting requirements and tax consequences. https://www.irs.gov/businesses/international-businesses/foreign-trust-reporting-requirements-and-tax-consequences. Retrieved .
  5. Internal Revenue Service, Instructions for Form 3520. https://www.irs.gov/instructions/i3520. Retrieved .
  6. Tax Department, Republic of Cyprus, CRS. https://www.gov.cy/mof-tax/en/documents/crs/. Retrieved .
  7. Cyprus Securities and Exchange Commission, Trusts Registry. https://www.cysec.gov.cy/en-GB/registries-portals/cytbor/. Retrieved .
  8. Department of Registrar of Companies and Intellectual Property, Republic of Cyprus, Trust / Foundation. https://www.companies.gov.cy/en/knowledgebase/faq-s-ubo-s/trust-foundation. Retrieved .

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