Tag Archive: CRS

1. FATCA v CRS

   7 April 2025 12:38 pm Leave a Comment

   FATCA v CRS – Introduction

   FATCA and CRS are often mentioned in the same breath, but they aren’t identical twins.

   They’re more like transatlantic cousins.

   Both were born out of the post-financial-crisis push for tax transparency, and both involve the exchange of financial account information.

   But their origins, scope, and enforcement mechanisms differ considerably.

   The Basics

   FATCA is a US law.

   It requires foreign financial institutions to report information about US taxpayers to the US IRS.

   CRS, by contrast, is a global framework developed by the OECD.

   It enables participating countries to share information with each other about their residents’ overseas financial assets.

   Enforcement Muscle

   FATCA has sharp teeth.

   If a foreign institution doesn’t comply, it risks a 30% withholding tax on US-sourced income.

   CRS doesn’t impose penalties directly – enforcement is left to participating jurisdictions. It’s a bit more carrot, a bit less stick.

   Who’s in Scope?

   FATCA applies to US persons: citizens, residents, and entities with substantial US ownership.

   CRS casts a wider net.

   It applies to anyone holding financial accounts outside their country of tax residence, no matter their nationality.

   How the Data Flows

   FATCA often works through intergovernmental agreements (IGAs), where local authorities collect and transmit the information to the IRS.

   CRS is multilateral and reciprocal: tax authorities both send and receive data under standardised protocols.

   Key Differences at a Glance

   Feature	FATCA	CRS
   Origin	US law (2010)	OECD initiative (2014)
   Scope	US taxpayers	All tax residents
   Reporting	To US IRS	To home jurisdiction tax authority
   Penalties	30% withholding	Local enforcement only
   Data Exchange	Mostly one-way	Reciprocal

   FATCA v CRS – Conclusion

   Both FATCA and CRS have transformed the global tax landscape.

   FATCA fired the first shot; CRS followed up with a coordinated global response.

   For advisers and clients alike, understanding the nuances between the two is essential to staying compliant and informed.

   Final Thoughts

   If you have any queries about this article on FATCA v CRS, or tax matters in your country or internationally then please get in touch.

   Alternatively, if you are a tax adviser and would be interested in sharing your knowledge and becoming a tax native, then please get in touch. There is more information on membership here.

2. What is the Common Reporting Standard?

   4 April 2025 12:23 pm Leave a Comment

   What is the Common Reporting Standard – Introduction

   The Common Reporting Standard (CRS) is sometimes described as the world’s answer to FATCA.

   Developed by the OECD and adopted by over 100 jurisdictions, CRS aims to crack down on global tax evasion by enabling automatic exchange of financial account information between countries.

   How it Works

   CRS requires financial institutions in participating jurisdictions to collect information about their account holders and report it to their local tax authorities.

   These authorities then exchange the data with the relevant countries where the account holders are tax residents.

   The scope is wide. CRS covers individuals and entities, and applies to a range of financial assets, including bank accounts, investment income, insurance products and even certain types of trusts and foundations.

   What Gets Reported?

   Typical data reported includes:

   • Name, address, tax identification number (TIN), and date/place of birth (for individuals)
   • Account number and balance/value
   • Interest, dividends, and gross proceeds from the sale of financial assets

   Who is Affected?

   Anyone holding financial accounts outside their country of tax residence could be affected.

   Financial institutions have had to overhaul onboarding procedures and due diligence checks.

   CRS also affects family offices, trusts, and private investment structures.

   Unlike FATCA, which focuses on US taxpayers, CRS is multilateral – and it doesn’t rely on any one country enforcing it. Countries commit to reciprocal information exchange.

   Comparison with FATCA

   FATCA and CRS share many features but differ in scope and origin.

   FATCA is a unilateral US initiative with global effects; CRS is a multilateral agreement coordinated through the OECD.

   CRS doesn’t have the same teeth as FATCA (no 30% withholding), but it casts a wider net.

   What is the Common Reporting Standard – Conclusion

   The Common Reporting Standard represents a new normal in cross-border tax compliance.

   It marks the end of banking secrecy and the rise of a transparency-first global tax environment.

   Final Thoughts

   If you have any queries about this article on the Common Reporting Standard, or tax matters in your country or internationally then please get in touch.

   Alternatively, if you are a tax adviser and would be interested in sharing your knowledge and becoming a tax native, then please get in touch. There is more information on membership here..

3. BVI and Online Submission for FATCA, CRS and CbC Reports

   1 February 2024 6:31 am Leave a Comment

   BVI and Online Submission for FATCA, CRS and CbC Reports – Introduction

   The BVI has made a significant stride towards enhancing transparency and tax information exchange.

   It has mandated that, from 24 January 2024, all entities under its jurisdiction with certain financial reporting responsibilities, are to submit their reports exclusively through the BVI Financial Accounting Reporting System (BVIFARS).

   The relevant reporting responsibilities include:

   • US Foreign Account Tax Compliance Act (FATCA),
   • the OECD Common Reporting Standard (CRS), and
   • the OECD country-by-country (CbC) reporting rules

   Background and Impetus for Change

   The shift to the digital platform is in response to the recommendations from the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum).

   Despite BVI’s AEOI legislation aligning with the Global Forum’s technical standards for years, the OECD’s 2022 review identified significant gaps in the actual AEOI implementation.

   The spotlight was on the “significant issues” concerning the assurance that Reporting Financial Institutions were accurately carrying out due diligence and reporting procedures.

   The Global Forum hence called for the BVI to fortify its domestic compliance framework to solidify CRS implementation effectiveness.

   Challenges and Proactive Measures by the BVI Government

   The BVI government candidly attributed the shortcomings to the devastating impact of Hurricanes Irma and Maria and the subsequent global COVID-19 pandemic, which significantly hindered their information exchange capabilities.

   In light of these challenges, the government requested a supplementary review to validate the improvements in their AEOI processes.

   This request was approved, with an on-site visit by the OECD slated for the first quarter of 2024 to confirm the BVI’s adherence to the stipulated conditions.

   Operational Details of the BVIFARS Portal

   With the activation of BVIFARS in January 2024, entities are now transitioning to this centralized online system for their FATCA, CRS, and CbC report submissions.

   A notable feature of this new system is the imposition of an annual usage fee of USD185 for each reporting entity, payable by 1 June each year.

   Key Deadlines and Compliance Requirements

   Entities are required to be vigilant about the following critical deadlines:

   • The enrollment deadline for US FATCA reporting is set for 1 April 2024.
   • The enrollment and notification deadline for CRS reporting falls on 30 April 2024.
   • The final date for submitting annual reports for both FATCA and CRS is 31 May 2024.

   Additionally, each legal entity is obligated to furnish its registered agent with the mandated economic substance information annually.

   The registered agent, in turn, must relay this data to the BVI International Tax Authority within six months from the end of the pertinent reporting period.

   BVI and Online Submission for FATCA, CRS and CbC Reports – Conclusion

   This transformation in the reporting process for BVI entities signifies a proactive approach to addressing the challenges previously flagged by the OECD.

   By embracing a digital and centralized reporting system, the BVI is taking definitive steps towards bolstering its compliance framework, thereby reinforcing its commitment to international tax transparency and cooperation.

   If you have any queries on this article about BVI and Online Submission for FATCA, CRS and CbC Reports, or BVI matters in general, then please get in touch.

4. Switzerland suspends the Automatic Exchange of Information with Russia

   17 October 2022 10:42 am Leave a Comment

   Last month, the Swiss Federal Council took the decision to suspend co-operation under the Automatic Exchange of Information (AEoI) between itself and Russia.

   Obligations under AEoI stem from the Common Reporting Standard (CRS). However, similar data sharing obligations arise under other tax-related information exchange including:

   • Country-by-Country (CbC) reporting,
   • Exchange of Information on Request (EoIR); and
   • the spontaneous exchange of information.

   These are also suspended.

   In respect of the CRS based obligations, this means that where a Swiss Reporting Financial Institution (FI) has submitted information for 2021 to the Swiss Federal Tax Administration (FTA) on its Russian resident clients then the FTA will not provide the Russian authorities with the data.

   It is worth pointing out that all obligations of a Swiss Reporting FI remain in place following the move. It is simply that the FTA will not pass this information over the Swiss authorities as would normally be the case.

   If you have any queries about this article, or Swiss tax matters in general, then please do get in touch.

   The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article