How does CRS work?

[John89]

I wonder how CRS reporting works. Do the tax authorities of a country contact a specific bank in another country, providing the TIN (?), passport No (?), name (?) of a person, and ask whether this person has an account in the specific bank?

Or do the tax authorities of a country ask the tax authorities of another country whether someone with a particular TIN, passport No. and name has an account in any bank in that country?

And what kind of information do the tax authority give? TIN, passport No, name? Because some people may have more than one passport and TIN Nos. While there may be many people with the same name.

 

[John89]

I found on a website: How does CRS account reporting work?
Financial institution always report to their local tax authority for CRS. It is the responsibility of the local tax authority to exchange the account information with the correct partner country.

Which means that (for example) if I open an account in (say) Philippines, with my (say) British passport and give them my (say) French address, they will let French tax authorities know. But if I open the account with a Philippino passport, give them my Philippino TIN, and give them my Philippino address, and then move to France and live in France with my French passport, how likely is it that the French authorities will find out I have an account in the Philippines?

Maybe if they found out I spent the last 20 years living in the Philippines they would want to find out whether I have anything there. But would they need to ask any individual bank in the Philippines? Would they ask the Philippine government (does it have a central dataset of all TIN numbers in all Philippin banks)? Is there a central dataset with all the TINs of every person in the world?

 

[legrant]

I don't think the Philippines has implemented CRS yet.

It's under the "DEVELOPING COUNTRIES NOT ASKED TO COMMIT AND THAT HAVE NOT YET SET A DATE FOR THE FIRST YEAR OF EXCHANGES" category

 

[Sols]

Reporting can be done to multiple jurisdictions. If you show up at a bank with a passport from one country and a mailing or residential address from another, there is a risk that the bank reports to both (i.e. the bank submits reports to its competent authority that ends up distributed to more than one jurisdiction).

Spend more time on coming up with solutions that work inside of the regulatory framework and you'll be far more successful in the long run, than if you try to find solutions that are not in line with the current and future reality.

 

[John89]

I don't think the Philippines has implemented CRS yet.

It's under the "DEVELOPING COUNTRIES NOT ASKED TO COMMIT AND THAT HAVE NOT YET SET A DATE FOR THE FIRST YEAR OF EXCHANGES" category

The question is how CRS works, not about the Philippines.

 

[Gediminas]

Which means that (for example) if I open an account in (say) Philippines, with my (say) British passport and give them my (say) French address, they will let French tax authorities know.

They can also report to the UK based on your passport.

 

[legrant]

The question is how CRS works, not about the Philippines.

What is shared under CRS?

According to the OECD, any bank in a CRS compliant country will ask and share the following:

• Name
• Address
• Place of birth* (for Individual and Controlling Persons)
• Date of birth*(for Individual and Controlling Persons)
• Country/ies and jurisdiction/s of tax residence
• Taxpayer identification number/s*
• Place of registration/incorporation (for Entities)
• Entity Type (for Entities)
• Controlling Person Type for certain Entity Types (for Controlling Persons)

When sharing information it will also share:

• The account/s balance or value and the total amounts of interest or payments credited

When and how is it shared?

"Financial institutions will first collect data from account holders and analyze that data to determine whether those account holders must be reported. If an account must be reported, the financial institution must compile data on the account holder and the account in a digital format and send the information to the local tax authority. The local tax authority will then validate the information and send the final report to tax authorities in any other jurisdictions where the account holder is obligated to pay taxes"


Now, will the banks follow the rules? That's probably up to them and their level of shadiness, but for your own sake, you should assume that they will 99% of the time will comply, either at the time of the account creation or some time after.

Sources:
https://www.pamirlaw.com/faq/common-reporting-standard-crs-faq/https://www.crs.hsbc.com/en/frequently-asked-questionshttps://www.oecd.org