What Is CRS Reporting?

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.