CRS and FATCA: Automatic Exchange of Tax Information

FATCA: The American "Long Arm"

FATCA (Foreign Account Tax Compliance Act, 2010, USA) — requires foreign financial institutions to report to the IRS on accounts of American taxpayers. Penalty for non-compliance: 30% withholding from any US payments to the bank.

Virtually all major international banks have signed agreements to comply with FATCA. Banks collect the client's status (American/non-American) when opening an account.

CRS: The Global Standard of Automatic Exchange

CRS (Common Reporting Standard) — developed by the OECD in analogy to FATCA for the whole world. 100+ countries participate in the automatic exchange of data. Banks automatically report annually to the tax authorities of the client's country of residence information about their accounts.

What is transmitted: Full name, TIN (tax identification number), country of residence, account number, year-end balance, income (interest, dividends, proceeds from sale of assets).

Countries not participating in CRS: USA (they have FATCA), a number of Persian Gulf states (UAE participates since 2018).

Practical Consequences for Russians

Russia participates in CRS. The Federal Tax Service (FTS) automatically receives data on foreign accounts of Russian residents from 100+ countries. Undeclared foreign accounts → fines, additional tax assessments.

Obligations of a Russian tax resident: notify the FTS about opening a foreign account (within 30 days); annually submit a report on transactions on foreign accounts; declare foreign income.

Practical Task

A Russian citizen opened an account in a Swiss bank in 2020. In 2022, became a tax resident of the UAE. In the account — $500 thousand (investment income). (1) What does the Russian FTS know about this account? (2) What are the citizen's obligations? (3) How did their situation change after the change of residency?