Last Updated on June 13, 2025 by Arnaud Collignon

This detailed briefing document reviews the main themes and most important ideas and facts from the provided sources, focusing on the “Standard for Automatic Exchange of Financial Information in Tax Matters – Implementation Handbook – Second Edition” by the OECD (2018).

Detailed Briefing: Standard for Automatic Exchange of Financial Information in Tax Matters (CRS)

Source: OECD (2018), “Standard for Automatic Exchange of Financial Information in Tax Matters – Implementation Handbook – Second Edition”

Purpose: This document provides guidance for jurisdictions implementing the Common Reporting Standard (CRS) for the automatic exchange of financial account information in tax matters. It details the steps and considerations for identifying reportable accounts and entities, applying due diligence rules, and reporting relevant information to combat tax evasion.

I. Core Principles and Objectives of the CRS

The CRS aims to tackle tax evasion by ensuring that Financial Institutions (FIs) in participating jurisdictions collect and report information on financial accounts held by non-residents to their respective tax authorities, who then exchange this information with the tax authorities of the account holders’ jurisdictions of residence.

Global Implementation and Compliance: Effective global implementation relies on “each jurisdiction… to rely on every other jurisdiction in terms of promoting and monitoring compliance by its domestic FIs with the Standard.” (p. 104, para 46) Jurisdictions are encouraged to facilitate and monitor compliance by FIs through effective communication and a risk-based approach.
Wider Approach: Adopting a wider approach can improve “the quality of the information collected in relation to reportable accounts and therefore the overall effectiveness of the system in tackling tax evasion.” (p. 104, para 29) This can include requiring FIs to collect Taxpayer Identification Numbers (TINs) for all new account holders where issued.
Confidentiality and Data Safeguards: Essential for the exchange of information are “appropriate confidentiality and data safeguards in place” by the jurisdictions involved. (p. 105)

II. Key Steps in CRS Implementation and Due Diligence

The handbook outlines a methodical approach for FIs to identify and report financial accounts, often referred to as a “five-step” process, adapted for trusts:

Determining if the Entity is a Reporting Financial Institution: This involves assessing if the entity is in a participating jurisdiction and meets the definition of a Financial Institution.

Reporting Nexus: The Standard targets “Entities within a Participating Jurisdiction as those that can be most effectively compelled to report the necessary information by that jurisdiction.” (p. 108, para 118)
Types of Financial Institutions: Includes “Depository Institutions (e.g., savings banks, commercial banks), Custodial Institutions (e.g., custodian banks, brokers), Investment Entities (e.g., entities investing in financial instruments), and Specified Insurance Companies.” (p. 109)
Non-Reporting Financial Institutions: Certain entities are excluded, such as “governmental Entities, and their pension funds, International Organisations, Central banks, and Certain retirement funds.” (p. 109) Jurisdictions are expected to publish a single, public list of domestically-defined Non-Reporting FIs. (p. 108)
Holding Companies/Treasury Centres: “A holding company or treasury centre of a financial group will have the status of a Financial Institution if it meets the definition… and in particular on whether it engages in the specified activities or operations of a Financial Institution… even if those activities or operations are engaged in solely on behalf of Related Entities or its shareholders.” (p. 238)

Reviewing Financial Accounts: FIs must identify which accounts are considered “Financial Accounts” and therefore subject to review.

Categories of Financial Accounts: “Depository Accounts, Custodial Accounts, Equity and Debt Interests, and Cash Value Insurance Contracts and Annuity Contracts.” (p. 110)
Non-Reporting Accounts (Excluded): Examples include “retirement and pension accounts, non-retirement tax-favoured accounts, Term life Insurance Contracts, Estate accounts, Escrow accounts, and Depositary accounts due to not-returned overpayments.” (p. 110)

Identifying Reportable Accounts: This involves determining if a Financial Account is reportable based on the Account Holder or its Controlling Persons.

Reportable Jurisdiction Person: An individual or entity “resident in a Reportable Jurisdiction for tax purposes.” (p. 111, para 135) Jurisdictions must publish a list of these Reportable Jurisdictions.
Controlling Persons: For certain Entity Account Holders (Passive NFEs), the FI must establish whether the entity is controlled by Reportable Persons.

Applying Due Diligence Rules: Detailed procedures exist for both “Preexisting Accounts” (accounts opened before a specified date) and “New Accounts” (accounts opened after that date), and for “Individual Accounts” and “Entity Accounts.”

Preexisting Accounts vs. New Accounts: “One of the key decisions for implementing jurisdictions is the date from which the New Account procedures will apply.” (p. 112, para 154)
Flexibility in Procedures: A jurisdiction may allow FIs to apply “the due diligence procedures for New Accounts to Preexisting Accounts” and “the due diligence procedures for High Value Accounts to Lower Value Accounts.” (p. 115, para 224)
Expanded Definition of Preexisting Account: Jurisdictions may allow FIs to treat certain new accounts held by preexisting customers as Preexisting Accounts for due diligence if AML/KYC procedures can be relied upon and no new customer information is required. (p. 58, 60, 62, and p. 103, para 13)
Residence Address Test: For “Preexisting Lower Value Accounts (less than $1 million) held by Individual Account Holders,” FIs “may allow… to determine an Account Holder’s residence based on the residence address provided by the Account Holder so long as the address is current and based on Documentary Evidence.” (p. 103, para 8) If this test cannot be applied (e.g., “in-care-of” address), an electronic indicia search is required.
Self-Certification: A critical tool for new accounts and curing indicia. A self-certification “must be signed (or otherwise positively affirmed…)” and include “name; address; jurisdiction(s) of residence for tax purposes and TIN(s).” (p. 114, para 183; p. 116, para 209)
Reason to Know Rule: FIs can rely on self-certifications “unless it knows or has reason to know that the self-certification is incorrect or unreliable.” (p. 240, Q8) This applies to TINs and other information. If a self-certification indicates no tax residence but other documentation has an address, it creates “reason to doubt the validity of the self-certification.” (p. 241, Q25)
TIN Collection: A TIN is not required for Preexisting Accounts if not in records and not legally required, but “reasonable efforts to obtain the information” are expected. (p. 115) For controlling persons not in a Reportable Jurisdiction, TIN collection is not required unless domestic law (wider approach) specifies. (p. 237, Q5)

Reporting and Exchange of Information: Once identified, relevant account information is reported.

Information Reported: Includes “identifying information of the trust… and the identifying information of the Reporting Financial Institution.” (p. 121, para 291)
Financial Activity Information: For Depository Accounts, “the total gross amount of interest paid or credited.” For Custodial Accounts, “total gross amount of interest paid or credited,” “total gross amount of dividends,” and “total gross amount of other income generated with respect to the assets.” (p. 115)
Gross Proceeds: For Custodial Accounts, “any income, and gross proceeds from the sale or redemption of such Financial Assets are reportable by the Custodial Institution maintaining such Custodial Account, regardless of the account to which such amounts are paid or credited.” (p. 237, Q4)

III. Specific Treatment of Trusts in the CRS

Chapter 6 specifically addresses trusts, recognizing their unique structures.

Two Circumstances for CRS Application:“When a trust is a Reporting Financial Institution.”
“When a trust is a NFE that maintains a Financial Account with a Reporting Financial Institution.” (p. 119, para 234)

Basic Features of a Trust: Involves a settlor, trustee, and at least one beneficiary. Trusts can be “revocable or irrevocable.” (p. 119, para 238-239) Beneficiaries can have “mandatory distributions” or “discretionary distributions.” (p. 119, para 241) A “protector may also be appointed,” who “enforces and monitors the trustee’s actions.” (p. 120, para 243)
Determining Trust Status (FI or NFE):A trust is a Financial Institution if it “accepts deposits,” “holds financial assets for the benefit of other persons,” or is an “Investment Entity.” (p. 120, para 244) This includes trusts that are “Collective Investment Vehicles or other similar investment vehicle established with an investment strategy of investing, reinvesting, or trading in Financial Assets.” (p. 120, para 244)
If not an FI, a trust is a Non-Financial Entity (NFE), which can be either “Active NFEs or Passive NFEs.” (p. 120, para 245)
Trust as a Reporting Financial Institution:Residence: A trust is considered resident “where the trustee(s) is resident.” If multiple trustees, it’s a Reporting FI in all participating jurisdictions where a trustee is resident. (p. 120, para 249)
Account Holders: Equity interests are held by “any person treated as a settlor or beneficiary… or any other natural person exercising ultimate effective control over the trust.” This “at a minimum, will include the trustee and the protector as an Equity Interest Holder.” (p. 121, para 253) A “discretionary beneficiary will only be treated as an Account Holder in the years in which it receives a distribution from the trust.” (p. 121, para 253) Protectors must be treated as Account Holders “irrespective of whether it has effective control over the trust.” (p. 243, Q6)
Look Through for Entities: If a settlor, beneficiary, or controlling person is an entity, it “must be looked through (including any further intermediate Entities), and the ultimate natural controlling person(s) behind the Entity identified.” (p. 121, para 253)
Trust as a Non-Financial Entity (NFE) Account Holder:Reportable Account Determination: An account held by a trust (NFE) is reportable if:
“The trust is a Reportable Person.” (Generally, if resident for tax purposes in a Reportable Jurisdiction. Many trusts have no tax residence).
“The trust is a Passive NFE with one or more Controlling Persons that are Reportable Persons.” (p. 122, para 264)
Identifying Controlling Persons of a Trust (NFE): The CRS defines “Controlling Persons of a trust are its trustee(s), settlor(s), protector(s) (if any), and beneficiary(ies).” (p. 124, para 284) For discretionary beneficiaries, only those who receive a distribution in the reporting period are treated as Controlling Persons. (p. 122, para 268)
Information Reported about the Trust (NFE): Includes identifying information of the trust and FI, and for Passive NFEs, “the identifying information of each Controlling Person… and for each Controlling Person, the total account balance or value, and the total gross amount paid or credited to the Controlling Person.” (p. 122, para 292; p. 125, table)

IV. Compliance and Monitoring

Jurisdictions are expected to proactively ensure compliance and identify non-compliance.

Compliance Review Process: Jurisdictions should consider how to “facilitate and monitor compliance by Financial Institutions (FIs) with the Standard.” (p. 104, para 45) This can involve:
Monitoring internal and external resources for information indicating non-compliance.
Focusing on “key risk areas of the CRS.” (p. 104, para 60)
Requiring FIs to maintain “sufficient systems for due diligence, record keeping and reporting” and conduct “periodic, independent, risk-based testing of controls.” (p. 105, para 67)
Indicators of Non-Compliance: These include “inquiries or information indicating underreporting or inaccurate reporting from… another Participating Jurisdiction,” “absence of reporting,” “drastic changes in the volume of reporting,” and “reporting of TINs for significantly fewer accounts.” (p. 104, para 58)
Sharing Information: Jurisdictions should “consider whether and how they can best share such information with one another.” (p. 104, para 59)
Penalties: Compliance reviews can provide “numerical results for the imposition of penalties.” (p. 105, para 68)

V. Definitions and Other Considerations

Passive Income: The standard does not define passive income, but the Commentary provides a list of items generally considered passive income and states “the determination of passive income may be made by ‘reference to each jurisdiction’s particular rules.'” (p. 243, Q3) Even if an asset doesn’t produce passive income in a period, if it “produces or could produce passive income,” it’s considered for passive income production (e.g., cash held for interest). (p. 243, Q2)
Usufruct: Both the “bare owner” and the “usufructuary” may be considered “joint Account Holders or as Controlling Persons of a trust for due diligence and reporting purposes.” (p. 238, Q10)
Electronic Money Providers: No special rules apply; their status as an FI depends on “the facts and circumstances,” particularly if they meet the definition of a Depository Institution. (p. 239, Q8)
Dormant Accounts Threshold: While a USD 1000 threshold is indicative, “it is expected that jurisdictions electing to include dormant accounts as a Low-risk Excluded Account do not fix a threshold that substantially exceeds this amount.” (p. 239, Q6)
Validation of TINs: The OECD facilitates the dissemination of information “with respect to the issuance, collection and… practical structure and other specifications of TINs” to help FIs in their due diligence. (p. 240, Q8)
Self-Certification Format: A self-certification can use “yes/no response to questions about tax residence,” but information on tax residence cannot be prepopulated. (p. 240, Q11)