For individuals and families who hold financial accounts overseas, or hold them through a company or trust. It covers what CRS is, how information reaches your place of tax residence, reporting when a company or trust holds the account, and what the bank checks and how to prepare.
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01 What is CRS?
The Common Reporting Standard (CRS) is a standard developed by the OECD under which participating countries and regions automatically exchange certain financial account information. Holding an account overseas does not mean the information will not be exchanged; what is actually exchanged depends on whether the jurisdictions involved take part and have an exchange relationship with each other. The United States does not take part in CRS: it obtains information on US taxpayers’ overseas accounts through its own Foreign Account Tax Compliance Act (FATCA).
02 How information is exchanged: tax residence, not nationality
When you open an account, the bank asks you to complete a tax residency self-certification and uses it to decide where you are tax resident. If that is another participating jurisdiction, the bank reports the account information each year to its local tax authority, which passes it to the tax authority where you are resident. Hong Kong and Singapore both apply CRS and exchange account information with the account holder’s place of tax residence under their own exchange relationships. What counts is where you are tax resident, not your nationality or passport.
03 Accounts held through a company or trust are covered too
Holding an account through a company does not keep it out of reporting. The bank first decides what kind of entity the company is: if its income comes mainly from investments such as interest and dividends, the bank must also identify the people who actually control it, its beneficial owners, and report them according to where they are tax resident. Trusts are similar: the settlor, trustees, beneficiaries and other related persons may be reported, and who reports, and to which authority, depends on the type of trust and where it is.
04 What will the bank check, and how can you prepare?
Financial institutions collect tax residency self-certifications, tax identification numbers and beneficial owner information as required, and report to their local tax authority. Keep complete records of the source of funds, income and transactions; if you move to another country, become tax resident somewhere new or change your address, tell the bank and update your self-certification. Have professionals assess your reporting obligations where you are tax resident and in other relevant jurisdictions.
Frequently asked questions
What information is exchanged under CRS?
It generally includes the account holder’s identifying details, such as name, address, jurisdiction of tax residence, tax identification number, and date and place of birth, together with the account number, the year-end balance or value, and amounts such as interest, dividends and proceeds from selling financial assets. If the account is held by an entity such as a company or trust, the financial institution may also need to identify and report its controlling persons, the people who actually control the entity. What is actually reported depends on the rules of each jurisdiction.
If my information is exchanged, does that mean I have to pay additional tax?
Not necessarily. CRS is an information exchange system and does not in itself create any new tax; the tax authority that receives the information may compare it with what you have reported. Whether tax is payable still depends on the rules where you are tax resident, the nature of the income and what you have actually reported; if your past reporting may have been incomplete, it is advisable to consult a tax professional as early as possible.
Do insurance policies and real estate also fall within the scope of CRS?
CRS covers financial accounts: besides depository and custodial accounts, these include cash value insurance contracts and annuity contracts. Real estate held directly in your own name is not itself a financial account and is generally not reported under CRS; but if it is held through an entity such as a company, the related financial accounts may still be reported, and the real estate itself may carry other tax or reporting obligations. The actual scope depends on the rules of each jurisdiction and how financial institutions classify accounts.
I am tax resident in two places. How do I complete the self-certification?
List every place where you are tax resident, with the matching tax identification numbers; the account information may then be exchanged with each of them. The tests for tax residence differ, such as days spent in the country, a permanent home or where your personal and economic ties are strongest; if you are unsure of your position, have a tax professional confirm it before you complete the form.
How can a professional adviser help?
Nextrate starts from the needs of each case: we help clarify your goals, list the documents required, set out feasible options and the main risks, and work with qualified legal, tax and other professionals where needed. Any bank application, tax outcome or legal effect is determined independently by the relevant institution, case by case.