From June 5, 2026, Cyprus banks began to apply expanded Due Diligence procedures to identify actual tax residents.
The Essence Of The Changes
The Tax Department of the Republic of Cyprus has announced stricter control over holders of investment passports and residence permits (residence permits). The authorities have drawn the attention of banks and other financial institutions to the fact that such programs often serve as a tool for disguising real assets and tax evasion.
Questions From Banks Under The New Rules
The updated requirements apply in accordance with the Organization for Economic Cooperation and Development (OECD) Unified Reporting Standard (CRS), which provides for the automatic exchange of financial information between countries. Now, Cypriot banks are required to check their clients in detail if there is even a minimal suspicion that they are trying to hide their real "center of vital interests."
Investors will have to provide official answers to a number of questions:
- Did you receive citizenship or residence permit as a result of investments?
- Does the client have valid residence rights in any third countries?
- Has the client spent more than 90 days in other jurisdictions in total over the past year?
- In which countries did the client actually file his tax returns?
Categories Of Persons For Whom Inspections Will Become A Priority
The OECD has analyzed over 100 international investment programs and identified "high-risk" jurisdictions. Residents and citizens of these countries will be subject to enhanced screening in the first place. The list includes:
- Caribbean: Antigua and Barbuda, Dominica, Grenada, Saint‑Kitts and Nevis, Saint‑
- Middle East: United Arab Emirates (UAE) and Bahrain.
- Europe: Cyprus itself — in relation to the old "golden passports" program (closed in 2020) and the current programs for obtaining permanent residence for investments.
- Other regions: Bahamas, Barbados, Seychelles, Vanuatu, Turks and Caicos Islands.
Timing Of Implementation And Consequences
The new rules have already started to take effect. The regulator has set a tight deadline for bringing the banking sector in line with the updated requirements.:
For new clients from high—risk countries, enhanced verification is launched immediately from the date of publication of the relevant circular (June 5, 2026).
For existing bank clients, financial institutions are required to complete a full audit of their accounts within six months.
If it turns out that the actual state of affairs of the investor does not correspond to the declared tax residence, information about his accounts will be promptly transmitted to the tax authorities of the country of his actual residence through the CRS automatic data exchange system.
