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FAQ · SearchOffshore

What Is CRS Reporting?

CRS (Common Reporting Standard) is the OECD's framework for automatic exchange of financial account information between tax authorities. Over 100 jurisdictions participate. Offshore banks and financial institutions automatically report account balances, income and beneficial ownership information to the account holder's home-country tax authority each year.

The Full Answer

CRS — How Automatic Exchange Works

The OECD Common Reporting Standard (CRS) was developed in response to pressure for greater transparency in international financial accounts and was adopted by most major economies and offshore financial centres from 2016–2017. It creates a framework for automatic, annual exchange of financial account information between participating jurisdictions.

Under CRS, financial institutions (banks, custodians, investment funds, certain insurance companies and trust companies) in participating jurisdictions must:

  • Identify the tax residency of account holders and beneficial owners
  • Collect relevant financial information — account balances, income, proceeds of sales
  • Report this information annually to their local tax authority
  • The local tax authority automatically exchanges the information with the tax authority of each account holder's country of residence

CRS affects offshore bank accounts, investment funds, trusts (where the trustee is in a CRS jurisdiction), insurance wrappers and other financial accounts. It applies to individuals, companies and other legal entities. The practical effect is that tax authorities in most developed countries now receive automatic annual reports on their residents' offshore financial accounts.

CRS does not apply to the United States — the US operates its own equivalent regime (FATCA) and does not participate as a sending jurisdiction in CRS, though it does receive information under some bilateral agreements. This asymmetry has attracted significant international criticism.

CRS means that offshore financial accounts are no longer confidential from home-country tax authorities in most cases. Any person with unreported offshore accounts in a CRS-participating jurisdiction should seek immediate specialist tax advice — voluntary disclosure programmes typically offer significantly reduced penalties compared to being caught through automatic exchange.
Yes — trusts are subject to CRS reporting in most cases. The reporting obligations depend on whether the trustee is a professional trustee (a "Financial Institution" under CRS) in a CRS-participating jurisdiction, whether the trust has a "controlling person" who is resident in a CRS jurisdiction, and whether the trust has reportable accounts. Professional trustees in Jersey, Guernsey, Cayman and other CRS jurisdictions are required to conduct due diligence on their trusts and report relevant information on settlors, trustees, protectors, beneficiaries and other controlling persons to the local tax authority, which then exchanges that information with the relevant foreign authorities. This significantly reduces the privacy of offshore trusts vis-à-vis the beneficial owners' home-country tax authorities.
Both CRS and FATCA require automatic exchange of financial account information but operate differently. FATCA is US-specific legislation requiring foreign financial institutions to report accounts held by US persons to the IRS. CRS is an OECD multilateral framework requiring exchange between all participating jurisdictions. The key difference is that the US participates in FATCA as a receiving jurisdiction (getting information about US persons from foreign institutions) but does not participate in CRS as a sending jurisdiction (meaning foreign tax authorities do not automatically receive information about their residents' US accounts). This asymmetry is a frequent criticism of the US position in international tax transparency efforts.
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