The Common Reporting Standard or CRS is an international network of tax authorities which share personal and financial data about foreign nationals living in their countries.
The CRS started sharing data in 2017, with more countries coming online in the following years.
Today, the CRS covers more than 70 tax authorities.
The aim is to stop individuals and businesses from concealing cash and other assets undetected offshore.
Early Days Of Tax Data Exchange
The European Savings Directive of 2003 was the first multinational automatic exchange of tax data, followed by the US Foreign Account Tax Compliance Act in 2010.
The success of both in discouraging tax avoidance alerted other governments to how exchanging tax data could help their revenues.
The Common Reporting Standard was developed and agreed by the Organisation of Economic Co-operation and Development (OECD) by 2014, with the first automatic data transfers taking place in 2017.
How The CRS Works
If a new customer opens an account with a bank, the bank will confirm a list of personal information, including:
- Place and date of birth
- Tax residence
- Taxpayer identification number
For businesses, the bank will also want to know trading status, place of registration and registration number.
If the customer lives in the same country as their tax residence, they are not a CRS reportable person.
If their tax residence is in another country, the bank declares their personal details along with the balance of any account and the amounts of any interest or payments received to the local tax authority.
The tax authority then transmits this data to the customer’s home tax authority.
The home tax authority will expect the customer to declare the details of the bank account on their tax filings.
If they are not on the tax filing, the tax authority will start an inquiry to find out why and to make sure the bank customer hands over the right amount of tax for the year.
The aim is to make hiding money offshore harder for tax dodgers.
Countries In The CRS Network
Here is the current list of countries in the CRS network and the year they started reporting tax data:
|Country||Year Started Reporting|
|Antigua and Barbuda||2018|
|British Virgin Islands||2017|
|Isle of Man||2017|
|Turks and Caicos||2017|
The list has some notable missing names – like the United States.
The US runs a similar tax reporting network under the Foreign Account Tax Compliance Act (FATCA). FATCA demands foreign banks report the financial details of US citizens and businesses controlling offshore accounts.
Difference between CRS and FATCA
The CRS has no enforcement powers to make a financial institution file reports, but under FATCA, the US Internal Revenue Service can impose penalties for non-compliance and even ban a foreign bank from trading in the US.
Confirming Tax Residency
Tax residency is a matter of fact rather than choice. Expats cannot elect to be tax resident in a country but must follow a series of rules.
These rules differ between countries and expats unsure of their tax residency should take independent professional advice.
A starting place is the Organisation of Economic Co-operation and development web site, which has a library of guides outlining how most CRS tax authorities define tax residence.
Learn the difference between residence and domicile.
Here are some answers to common questions asked about the Common Reporting Standard (CRS).
Check the list above or go to the OECD CRS web portal online
CRS is a data-gathering tool that requires financial institutions to file personal and financial information about consumers and businesses with a tax authority. The aim is to limit the scope of offshore tax avoidance and evasion.
If you are a US tax resident, your offshore financial information is subject to FATCA rather than CRS. If you are tax resident in a CRS country, then your data is likely to be transferred to that country under CRS.
Tax authorities swap their data once a year, typically around September. This means swapped data may be out of synch with tax filings.
Tax residence is a complicated topic and expats should take professional advice. A brief outline to tax residency rules set by many countries is available on the OECD web site.
A CRS reportable person is someone with bank accounts or other financial accounts in a country where they are not tax resident.