What is the Common Reporting Standard (CRS)?
Think of CRS as a global agreement, spearheaded by the OECD, that requires financial institutions (banks, brokerages, etc.) in participating countries to identify and report information on accounts held by foreign tax residents. This information is then automatically exchanged with the tax authorities in the account holder's country of residence each year.
The goal is simple: to prevent individuals and entities from hiding assets and income offshore to evade taxes. Before CRS, tax authorities had to make specific requests for information, which was a slow and often fruitless process. Now, the data flows automatically.
How CRS Works in Practice: The Reporting Chain
The process is straightforward but depends entirely on one crucial piece of information: your tax residency.
You open a bank account: When you open an account in a CRS-participating country (e.g., Portugal), the bank will ask you to self-certify your country or countries of tax residence.
The bank identifies reportable accounts: If you declare you are a tax resident of another participating country (e.g., Germany), your account is flagged.
Information is collected: The bank gathers specific data about you and your account.
Data is sent to the local tax authority: The Portuguese bank sends your account information to the Portuguese tax authority.
Information is exchanged automatically: The Portuguese tax authority forwards this information to the German tax authority.
The key takeaway is that information is sent to where you declare yourself to be a tax resident. For a perpetual traveler with no fixed tax residency, this raises important strategic questions that are central to a well-planned nomad lifestyle.
Which Countries Participate in CRS? The Key Exceptions
As of 2025, over 100 jurisdictions have committed to CRS, including nearly all major international financial centers and traditional "tax havens." This widespread adoption means your options for non-reporting banking are limited, but not non-existent.
The most significant non-participant is the United States.
The US does not participate in CRS. Instead, it relies on its own system, the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks to report on the accounts of US citizens. This makes the US a one-way street for financial data—it receives information but does not share it under the CRS framework. This unique position has made the US, and specifically structures like the US LLC for non-residents, a cornerstone of modern asset protection and tax planning for digital nomads.
Other non-participating or slow-to-implement jurisdictions include:
Classic Offshore Hubs: Bahrain, Nauru, Vanuatu.
Other Options: Countries like Georgia, Paraguay, and Botswana offer more stable, non-CRS banking environments, though each comes with its own considerations.
What Information Do Banks Share Under CRS?
Once your account is identified as reportable, banks are required to send a standard set of information annually. This isn't just a quick note; it's a detailed financial snapshot.
Personal Details: Name, address, date of birth, and Tax Identification Number (TIN).
Account Information: The account number and the name of the financial institution.
Financial Data: The total account balance or value at the end of the calendar year, as well as the total gross amount of interest, dividends, and other income credited to the account during the year.
If you hold an account through an entity like a company or trust, the bank will "look through" the entity to identify and report on the controlling persons (beneficial owners).
Are All Accounts Reported? Active vs. Passive Income
The OECD has made a crucial distinction between accounts that pose a low risk for tax evasion and those that are high risk. This is particularly relevant for entrepreneurs.
Accounts Generally AFFECTED by CRS:
Personal current and savings accounts
Custodial accounts holding securities
Company accounts that primarily generate passive income (e.g., dividends, interest, royalties).
Certain cash value insurance or annuity contracts.
Accounts Generally NOT Affected by CRS:
Company accounts that primarily generate active income from the sale of goods or services.
Certain retirement and pension accounts.
Life insurance contracts.
This distinction is huge. An offshore company engaged in active business (like providing digital marketing services) may not be reportable in the same way as a company that simply holds investments. This allows for strategic corporate structuring to legally minimize reporting.
