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A Crash Course in the CRS: An Examination of the OECD’s Common Reporting Standard

The OECD’s Common Reporting Standard (CRS) is a global initiative designed to facilitate the automatic exchange of tax information among countries. Its primary goal is to combat tax evasion and enhance transparency. Major financial centers worldwide, except the US, have committed to the CRS, which mandates financial institutions to conduct due diligence and report financial information about account holders to their respective tax authorities.

Overview of the Common Reporting Standard (CRS)

Introduced in 2014 and endorsed by the G20, the CRS establishes detailed reporting requirements and due diligence procedures for financial institutions. These institutions must identify and report information about account holders who are tax residents of other countries, including names, addresses, tax identification numbers, and financial account details.

Key Milestones

Key milestones in the CRS implementation include:

  • February 2014: The OECD unveiled the CRS.
  • May 2014: All OECD members and several non-OECD members endorsed the standard.
  • October 2014: 52 jurisdictions signed the Multilateral Competent Authority Agreement (MCAA).
  • October 2015: An additional 13 jurisdictions signed the MCAA in Barbados.
  • 2017: Early Adopters began exchanging information for the 2016 tax year.

Entity Classification

Entities under the CRS are classified into:

  • Financial Institutions (FIs): Including banks, custodial institutions, investment entities, and specified insurance companies.
  • Non-Financial Entities (NFEs): Further divided into active and passive NFEs, with classification affecting the type and scope of information to be reported.

Due Diligence and Reporting Requirements

Financial institutions must follow specific procedures to identify and report accounts held by foreign tax residents. This involves distinguishing between pre-existing and new accounts, and between individual and entity accounts. Required information includes personal details of account holders and financial information such as account balances and income. Both FIs and passive NFEs with controlling persons who are foreign tax residents must be reported.

Competing Financial Centers

The CRS reveals diverging paths between financial centers:

  • US: Has not adopted the CRS, relying instead on its Foreign Account Tax Compliance Act (FATCA) for tax information exchange.
  • Switzerland: A signatory to the MCAA, Switzerland emphasizes confidentiality and regularization in its CRS implementation.

Confidentiality and Safeguards

The CRS includes stringent confidentiality safeguards to protect exchanged information, limiting its use to tax purposes only. Breaches can lead to suspension or termination of automatic information exchange agreements.

Global Impact and Challenges of the OECD CRS

The CRS aims for global tax transparency but faces challenges from non-participating jurisdictions like the US. The differential reporting standards between the CRS and FATCA have led to significant financial outflows to the US, affecting compliance among financial centers committed to the CRS.


The CRS represents a significant step toward global tax transparency, though its full impact remains to be seen. With major financial centers committed to the CRS, ensuring effective implementation and addressing challenges from non-participating jurisdictions like the US is crucial. The ongoing efforts to align global tax reporting standards and the commitment to safeguarding confidentiality will be key factors in the success of this initiative. Stakeholders must stay informed and adapt to evolving requirements to maintain compliance and support the overarching goals of the CRS.

John J. Ryan, A crash course in the CRS, STEP Trust Quarterly Review, 2016, March, page 24

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