Common Reporting Standard

Definition and purpose

The OECD's Standard describes the Common Reporting Standard as a framework for jurisdictions to obtain financial account information from financial institutions and exchange it with other jurisdictions each year.^[1]

The standard specifies the information exchanged, the institutions that report, covered accounts and taxpayers, and common due diligence procedures. The OECD publication includes the Common Reporting Standard, its commentaries, a model agreement between competent authorities, and an XML schema guide.^[1]

Who and what is covered

Under the OECD framework, financial institutions apply due diligence to identify accounts that meet the definition of reportable accounts. In St. Kitts and Nevis, a reportable account is one held by a tax resident of a reportable jurisdiction, or by a Passive NFE with a controlling person resident there.^[1][4]

A reportable person is an individual or entity resident for tax purposes in a reportable jurisdiction. For a Passive NFE entity account, financial institutions assess whether it has controlling persons who are reportable persons. For new accounts, they generally require a self-certification from the account holder to determine the account holder's tax residence. A reportable jurisdiction is one with which an exchange agreement creates an obligation to provide the information, as set out in the local rules.^[4]

Reporting status also has boundaries. Singapore's authority lists trustee-documented trusts as non-reporting when a reporting financial institution trustee undertakes the trust's due diligence and reporting obligations. It also describes entities with no reporting obligation and certain investment entities that meet a stated 'solely because' test as outside registration requirements.^[3]

Relationship to FATCA and U.S. reporting

Jersey guidance explains that CRS and U.S. FATCA have been designed for consistency, while requiring separate CRS and FATCA reports. Its example addresses a client resident in both the United States and a CRS jurisdiction, whose details appear in both reports. The United States takes part in cross-border information exchange through FATCA and does not participate in CRS.^[2][4]

CRS covers financial institution information exchange and is distinct from FATCA.

Local implementation

The CRS operates through jurisdictions' implementation rules and exchange arrangements. In St. Kitts and Nevis, domestic legislation requires financial institutions to collect and report specified information for certain accounts and apply OECD due diligence procedures. Singapore's authority describes registration and annual returns for reporting institutions, subject to its stated exclusions.^[3][4]

Tax information exchange agreement

Tax information exchange agreement, or TIEA, is an agreement under which two countries' tax authorities exchange requested tax information. Unlike CRS reporting, which is automatic, exchange under a TIEA is on request. TIEAs typically cover civil and criminal tax matters.^[5][6] Exchange under a TIEA typically applies regardless of the person's residence or citizenship.^[5][6]

The U.S. Treasury reported that the United States concluded TIEAs with offshore financial centers.^[7][8]

Automatic exchange of information

Automatic exchange of information is the process by which jurisdictions obtain financial account details from financial institutions and send them to other jurisdictions each year. The Common Reporting Standard (CRS) specifies the information exchanged, reporting institutions, account types, taxpayers covered, and due diligence procedures. CRS is one financial account framework within a wider category of automatic exchanges. Other arrangements can cover income categories, residence changes, property transactions, value added tax refunds, or tax withheld at source. CRS sets a minimum level of information, and jurisdictions may exchange more.^[1]

Under CRS, covered institutions include custodial institutions, depository institutions, investment entities, and specified insurance companies, subject to exclusions. Reportable account information can include interest, dividends, account value, certain insurance income, sales proceeds, and other account income or payments. An account may be reportable when held by a reportable person or by a passive non-financial entity with a reportable controlling person. A reportable person generally is a person resident for tax purposes in a reportable jurisdiction, subject to specified exclusions for institutions and publicly traded corporations.^[1]

CRS treats trusts as entities and requires looking through passive entities to identify relevant controlling persons. For a trust, controlling persons include settlors, trustees, protectors when present, beneficiaries or beneficiary classes, and other natural persons exercising ultimate effective control.^[1]

CRS draws on the intergovernmental approach to FATCA, while differences reflect its multilateral design and U.S. specific features, including citizenship based taxation. The United States does not require look through treatment for certain investment entities in non-participating jurisdictions.^[1][2]

A participating jurisdiction has an agreement to provide specified information and appears on a published list. A reportable jurisdiction has an agreement creating an obligation to provide specified information and also appears on a published list. Local implementation assigns reporting tasks to institutions and authorities. In Singapore, Reporting SGFIs are subject to CRS reporting and due diligence requirements, and PICs with reporting obligations file annual returns through the IRAS myTax Portal. In St. Kitts and Nevis, the Inland Revenue Department receives and validates reports and exchanges information with partner jurisdictions.^[1][3]

Controlling persons in CRS reporting

For a legal person, a controlling person is a natural person who exercises control, generally through an ultimate controlling ownership interest. The ownership threshold depends on the entity's structure and is usually identified using a risk based threshold; 25 percent is given as an example. If ownership does not identify a controlling person, a natural person who controls the entity through other means may qualify. If none is identified that way, the senior managing official is included.^[1]

For trusts, the OECD list includes settlors, trustees, protectors when present, beneficiaries or classes of beneficiaries, and other natural persons with ultimate effective control. Treatment of discretionary beneficiaries as controlling persons may vary by jurisdiction. St. Kitts and Nevis also gives trust roles as examples of controlling persons and says their tax residence is determined when the account holder is an entity.^[1][4]

A reportable account may be held by a tax resident of a reportable jurisdiction or by a passive non financial entity with controlling persons resident in such a jurisdiction. Reporting financial institutions collect and report information about certain financial accounts under the local Act and regulations. Singapore's tax authority says a Reporting Singaporean Financial Institution must register for CRS, review maintained financial accounts using due diligence procedures, identify reportable accounts, and submit an annual CRS return.^[3][4]

Competent authority agreement

Competent authority agreement (CAA) is an arrangement that activates automatic information exchange between participating jurisdictions. The OECD's Model Competent Authority Agreement connects the Common Reporting Standard (CRS) to a legal instrument permitting exchange, such as a multilateral convention or bilateral tax treaty, and sets practical arrangements for information flows. The Model CAA and CRS are connected parts of the common standard for reporting, due diligence and exchange.^[1]

It operates alongside a legal basis for exchange and domestic CRS rules. A jurisdiction may use an existing convention, bilateral tax treaty or another permitted arrangement; domestic law supplies financial institution reporting and due diligence rules.^[1]

The model is drafted for reciprocal bilateral exchange between two jurisdictions. The agreement may be multilateral, while each exchange remains bilateral. The OECD also provides a non-reciprocal bilateral version for cases such as a jurisdiction without income tax. The preamble allows signing before one or both jurisdictions have reporting and due diligence rules in place, while domestic implementation still requires those rules. The agreed scope must remain consistent with the information covered by the exchange provisions.^[1]

Jersey's government described signing a CAA with an early adopters group as a first step in implementing the CRS. It distinguished that agreement from separate automatic exchange agreements with Guernsey and the Isle of Man, and said the CAA did not provide for exchange between those Crown dependencies.^[2]

Questions and answers

Related terms

• Reporting financial institution: The Common Reporting Standard classifies a financial institution as reporting when it falls within the relevant jurisdiction's rules and is not non-reporting.
• Controlling person: The CRS defines controlling persons and explains their role in due diligence and tax residence reporting for trusts, account holders, and reportable accounts.
• Financial account (CRS): The Common Reporting Standard defines accounts at financial institutions, including deposit and custody accounts, plus equity and debt interests and insurance.

Related guides and articles

• The OECD Common Reporting Standard: The Common Reporting Standard sets rules for financial account reporting and the annual exchange of that information between jurisdictions, for U.S. citizens.
• Due diligence and controlling persons of a trust: The CRS describes due diligence as account review by institutions to identify reportable accounts and information, including tests for entity accounts.
• FATCA and foreign financial institutions: FATCA gives foreign financial institutions duties to report account information about U.S. taxpayers and entities with substantial U.S. ownership abroad.

Related pages

• Glossary: All terms.
• Controlling person
• Financial account (CRS)
• IRS forms