In a bid to fight tax evasion, the OECD has developed the CRS and managed to convince over 80 countries to implement it. Starting in 2017, banks will have to report every accounts / transactions to the country of residency of the account holder. In short, Banking secrecy is truly dead.

 

Common Reporting Standard (CRS) explained

Tax Information Exchange Agreements (TIEA) are fairly common and have been used for many years by countries in their fight against tax evasion. They allow one country to request another country to hand over the financial information of a tax payer, often to help a tax investigation. It is important to understand that TIEAs work on a pull basis. In plain English, they are not automatic. CRS on the other hand is automatic and its scope is broader, much broader. If you have a bank account in one of the signatory countries, you automatically fall within its scope. All your bank balances / transactions will automatically be reported to the tax authority of the country in which you are a tax resident. The banks will have to collect your tax ID so unless you are a legal resident in a foreign country, you will have to hand over that of your home country.

 

Mitigation

The best way to mitigate the impact of the implementation of CRS is to become the tax resident of a low/no-tax country. As a tax resident, you will legally be entitled to use a tax ID from that country when opening new bank accounts (or updating existing accounts). If properly structured, you can also significantly reduce your tax burden (or eliminate it entirely). You can find a list of the best low/no-tax residencies here. You can also ask for personalized help directly from the Insiders Club homepage.

 

An easy, legal workaround

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Sources

http://www.oecd.org/tax/automatic-exchange/common-reporting-standard/

  • Alex Strong

    Good to know