FATCA and CRS Reporting: What Every Internationally Mobile Investor Needs to Know

Overview

Two international tax information exchange frameworks — the US Foreign Account Tax Compliance Act (FATCA) and the OECD's Common Reporting Standard (CRS) — have fundamentally changed the landscape for internationally mobile investors. Together, they have effectively ended meaningful offshore financial secrecy from tax authorities. Understanding how these frameworks operate, what information is reported, and what your obligations are is essential for any individual with foreign financial accounts or offshore investments.

This guide explains both frameworks clearly, sets out what investors can expect from their banks and investment managers, and identifies the practical implications for internationally mobile high-net-worth individuals.

This guide is for general information only. Tax law and reporting obligations vary by jurisdiction and individual circumstances. Obtain specialist advice if you are unsure of your reporting obligations.

What Is FATCA?

Background

The Foreign Account Tax Compliance Act was enacted by the United States in 2010 and came into full effect from 2014. Its purpose is to ensure that US persons — US citizens, US residents, Green Card holders, and certain others with US tax obligations — cannot hide assets or income in foreign financial accounts.

FATCA requires foreign financial institutions (banks, brokerage firms, fund managers, insurance companies, and others outside the US) to:

1. Identify their account holders who are US persons
2. Report relevant financial account information about those US persons to the US Internal Revenue Service (IRS)

Intergovernmental Agreements

Rather than requiring foreign banks to report directly to the IRS — which would have created legal conflicts in many jurisdictions — the US negotiated bilateral Intergovernmental Agreements (IGAs) with foreign governments. Under an IGA, foreign financial institutions report to their own domestic tax authority, which then passes the information to the IRS automatically.

The UK, Cyprus, UAE, and most other major financial jurisdictions are IGA partners. This means that UK banks (for example) report US-person account information to HMRC, which exchanges it with the IRS.

Who Is a US Person for FATCA Purposes?

A "US person" for FATCA purposes includes:

• US citizens (including those who have never lived in the US)
• US permanent residents (Green Card holders)
• Individuals meeting the Substantial Presence Test (roughly, 183 days in the US in a rolling three-year period)
• Certain US-incorporated entities

Importantly, FATCA affects all customers of foreign financial institutions — not just US persons — because every institution must assess all account holders to determine whether they are US persons. This is why banks ask all customers (regardless of nationality) to complete the relevant forms.

The W-8BEN and W-9 Forms

• W-8BEN: Completed by non-US individuals to certify they are not US persons. This form certifies that the individual is not subject to US tax withholding under FATCA.
• W-9: Completed by US persons to provide their Taxpayer Identification Number (TIN) to the financial institution, confirming they are a US person and acknowledging FATCA reporting obligations.
• W-8BEN-E: Completed by non-US entities (companies, trusts, foundations) to confirm their FATCA status.

These forms must be renewed periodically and when circumstances change. Failure to provide them can result in 30% withholding on certain US-source payments.

What Is CRS?

Background

The OECD's Common Reporting Standard was developed in response to FATCA, which had demonstrated the feasibility of automatic financial information exchange. CRS was agreed in 2014 and most major financial jurisdictions committed to implementing it from 2016 or 2017. Unlike FATCA — which is bilateral (US and each partner country) — CRS is multilateral: participating countries exchange information with all other participating countries simultaneously.

How CRS Works

Under CRS, financial institutions in participating countries:

1. Identify account holders who are tax resident in another CRS-participating country
2. Collect information about those accounts (balance, income, identifying information)
3. Report that information to their domestic tax authority
4. The domestic tax authority automatically exchanges it with the tax authority in the account holder's country of residence

A UK resident with a bank account in Switzerland receives no special privacy under CRS. The Swiss bank reports the account to Swiss tax authorities, who automatically exchange the information with HMRC. Similarly, a Cyprus resident with a UK investment account will have that account reported to HMRC and then to the Cyprus Tax Department.

What Is Reported Under CRS?

Financial institutions report the following for each reportable account:

• Account holder identification: name, address, jurisdiction of tax residence, tax identification number (TIN), date and place of birth (for individuals)
• Account information: account number, financial institution name and identifying number
• Financial information: account balance or value at year end, and during the year: gross amount of interest, dividends, and other income; gross proceeds from sales and redemptions

For trusts and other entities, the beneficial owners are also reportable in many cases.

CRS vs FATCA: Key Differences

Feature	FATCA	CRS
Who is reported	US persons	Tax residents of all CRS countries
Structure	Bilateral IGAs with US	Multilateral between 100+ countries
US participation	Yes (as recipient)	No (US is not a CRS participant)
Reporting to	IRS (via domestic authority)	All participating countries
Basis	Citizenship/residence (US unique — citizenship-based)	Tax residence

The US is notable for not participating in CRS as a sender of information. This means that US financial institutions do not automatically exchange information with other countries' tax authorities under CRS — though FATCA provides a separate exchange mechanism.

Practical Implications for Internationally Mobile Investors

There Is No Meaningful Offshore Secrecy

The most important practical implication is straightforward: tax authorities in CRS-participating countries receive automatic reports about their tax residents' offshore financial accounts. An individual who is tax resident in the UK but holds bank accounts in Switzerland, Singapore, or Cyprus should assume that HMRC receives annual reports about those accounts. The same applies to investments held through offshore fund structures, life assurance policies, and — in many cases — offshore trusts.

Offshore Account Compliance

Any investor with offshore financial accounts must ensure those accounts are declared on their domestic tax return (where required) and that any income or gains arising in those accounts is properly reported. In the UK, the Requirement to Correct legislation (now concluded) and ongoing HMRC offshore compliance campaigns reflect the use of CRS data to identify non-compliant taxpayers.

If you have not declared offshore accounts or income in previous years, voluntary disclosure is generally the appropriate route — the penalties for unprompted disclosure are typically lower than for non-compliance discovered by HMRC. Specialist advice from a tax professional experienced in offshore matters is essential.

Existing Offshore Structures

Offshore trusts, foundations, and holding companies that hold assets through financial accounts are generally within the scope of CRS reporting. The trustee, foundation administrator, or company director will typically be responsible for ensuring CRS compliance. Structures should be reviewed to ensure they are CRS-compliant and that all reporting is current.

US Person Considerations

US persons living outside the US face a particularly complex reporting environment: FATCA reporting by their foreign financial institutions, annual FBAR filing (FinCEN 114) for foreign accounts above certain thresholds, and Form 8938 (FATCA disclosure on the US tax return). See our separate guide on financial planning for US persons abroad for more detail.

Banking Difficulties

A practical consequence of FATCA and CRS compliance costs is that some financial institutions — particularly in certain offshore jurisdictions — have become reluctant to service clients with complex multi-jurisdictional profiles, US person status, or high-risk classifications. Finding and maintaining banking relationships in some jurisdictions requires proactive management and the ability to demonstrate regulatory compliance clearly.

Self-Certification and Due Diligence

Financial institutions are required to conduct due diligence on account holders to determine their tax residence status for CRS purposes. For new accounts, this typically involves:

• Collecting a self-certification form from the account holder declaring their tax residence(s) and TIN(s)
• Verifying the self-certification against other information held (know-your-customer documentation, transaction patterns)

Account holders must provide accurate self-certifications. Providing false information is an offence in most jurisdictions. Where circumstances change (change of tax residence, acquisition of a second nationality, etc.), account holders are typically required to notify their financial institution and provide an updated self-certification.

Reporting Obligations: A Summary for Individuals

If you are an internationally mobile individual with offshore financial accounts, you should:

1. Declare all offshore accounts on your domestic tax return (or equivalent disclosure form) as required
2. Report all income and gains arising in offshore accounts in the country where you are tax resident, subject to any applicable treaty relief
3. Complete W-8BEN or W-9 forms as requested by financial institutions
4. Provide accurate self-certification of your tax residence(s) to financial institutions
5. If you are a US person, ensure FBAR and Form 8938 compliance in addition to the above
6. Review offshore structures (trusts, companies) to ensure they are CRS-compliant

How Global Investments Can Help

Global Investments works with internationally mobile high-net-worth individuals who often have complex multi-jurisdictional financial profiles. We help clients understand their FATCA and CRS obligations, review offshore structures for compliance, and coordinate with specialist tax advisers to ensure that their financial affairs are properly disclosed and efficiently structured. Our experience in Cyprus — a jurisdiction at the intersection of European, Middle Eastern, and international financial flows — gives us a practical understanding of the reporting requirements that apply across our clients' key markets.

Contact us to discuss your reporting obligations and how to ensure your financial affairs are structured correctly in the current environment.