Under CRS, financial institutions in Hong Kong, Singapore, Switzerland and other participating jurisdictions report accounts held by non-residents to their local tax authority, which then exchanges the data with your country of residence. Whose name the account is in, and whether you have reported the foreign income, decide how exposed you are. Answer 4 questions to see where you stand.
Under the Common Reporting Standard (CRS), financial institutions in participating jurisdictions such as Hong Kong, Singapore and Switzerland report the financial accounts of clients who are tax non-residents to their local tax authority, which exchanges the information with the account holder's jurisdiction of tax residence. What gets exchanged is specific: typically account balances, interest, dividends and sale proceeds, along with tax identification numbers and identity details. Whether you have reported that foreign income at home decides whether the data, once exchanged, matches your return or not.
A cross-border exchange usually requires the account to be held somewhere other than your jurisdiction of tax residence. If the account is in your home jurisdiction and your due diligence details are consistent, it generally does not go down the cross-border route; the classic CRS case is a resident of country A holding an account in participating jurisdiction B. The account holder matters too. A personal account points straight to you. A company account classified as a passive NFE (passive non-financial entity) is looked through to its controlling persons, whose details are pulled into due diligence and reporting. Using a shell company as a buffer to stay out of sight often backfires.
This self-check sorts you on four points: whether you hold accounts in a participating jurisdiction, whether the account location differs from your tax residence, who holds the account (individual, company, passive or mixed), and whether the foreign income has been reported at home. The high-risk combination is typically a cross-border account, a different residence and no reporting, sometimes with a passive holding company on top. CRS itself is an information exchange, not a tax. But once your home tax authority has the data, it will check whether you reported the interest, dividends and gains. For anything unreported, back taxes, late-payment charges and legal consequences are where the real pain lies.
Typically the account holder's identity and tax number, the account balance, and interest, dividends, the cash value of certain insurance policies and proceeds from selling financial assets. The exact fields depend on local rules and the institution's reporting practice, but any account with a balance or investment income should be assumed to be in scope.
Broadly, a passive non-financial entity is one whose income or assets are mainly passive investments. Under CRS, accounts held by such entities are traced to the people who control them, and those controlling persons become the ones identified and potentially reported, rather than the process stopping at the company name.
Where the account location and your tax residence are the same and your due diligence details are consistent, this is usually not a case of exchange to another jurisdiction of residence. If you are also tax resident elsewhere, or due diligence shows dual residence, things get considerably more complicated and depend on your actual residence declaration.
The amount does not change whether it should have been reported. Small sums can still prompt a check from your home tax authority, and the bigger problem is years of systematic non-reporting being treated as deliberate concealment. Reviewing and correcting early usually puts you in a stronger position than dealing with it after the tax authority contacts you.
No. The self-check places your exposure and reporting gaps in a relative band based on your answers and points to what to tackle first. Whether there is actual under-reporting, and how to put it right, depends on your home country's tax law, your account statements and your filing history, and should be reviewed by a professional.