Common Reporting Standards (CRS) is an initiative that began in 2014 with the ambitious and high-minded goal of creating full transparency into the tax affairs of citizens in all Organisation for Economic Cooperation and Development (OECD) member countries.
On July 21, 2014, the OECD released the first version of the Standard for Automatic Exchange of Financial Account Information in Tax Matters, which would form the basis of the CRS framework to come.
By December 2015, over 95 jurisdictions had signed or were committed to signing the CRS. More than 50 jurisdictions were considered ‘early adopters’, meaning they started to automatically exchange information in 2017. The rest of the jurisdictions have committed to begin exchange in 2018.
CRS calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. Automatic Exchange of Information (AEOI) concerns any data or numbers in any format that can be used to clarify taxpayers’ income or assets. The legislation details the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.
The CRS legislation is modelled on the US’s aggressive Foreign Account Tax Compliance Act (FATCA), which was designed to prevent US citizens from evading payment of tax to the US Internal Revenue Service (IRS). In many ways, CRS is seen as the awkward stepchild of FATCA, since it has not been adopted by the US, but is very similar in structure with the same ultimate goals.
This Virtual Series provides an update on CRS implementation from a range of jurisdictions in which IR Global tax experts are currently operating. We have commentary from early adopters such as Spain and Luxembourg and insight on progress from later adopters such as Lebanon, a country which is well known for its banking secrecy.
The discussion touches on whether CRS has caused any conflict or tension during implementation, given issues such as the LuxLeaks Scandal and Lebanon’s entrenched banking secrecy. We also ask whether CRS has affected advice on tax structuring and identify any loopholes that our experts have spotted in the developing legislation.