CRS and FATCA for Cross-Border Structures

Two regimes, one effect

FATCA and the Common Reporting Standard are different in origin but similar in effect: both make financial institutions report account information automatically to tax authorities, so that income and assets held abroad can be matched against what a taxpayer declares at home. FATCA came first, from the United States; the CRS is the global version the OECD built on the same idea. For a family with cross-border structures, the combined effect is simple to state: the accounts behind the structure are reported.

Understanding which regime reaches which accounts, and to whom they report, is now part of designing any structure, because the reporting is automatic and the penalties for getting classification wrong fall on the institutions and, ultimately, the clients.

What FATCA does

The Foreign Account Tax Compliance Act requires financial institutions around the world to identify accounts held by US persons, US citizens and tax residents, including many with dual status, and report them to the US Internal Revenue Service, usually through their local authority under an intergovernmental agreement. FATCA is US-centric: it exists to ensure US persons cannot hold undeclared accounts offshore, and it applies regardless of where the account or the structure sits.

For a family with any US connection, a US-citizen child, a US-resident settlor, a US-based beneficiary, FATCA classification runs through the whole structure and must be handled correctly, because US reporting obligations are unforgiving.

What CRS does

The Common Reporting Standard is the multilateral equivalent. Financial institutions in participating jurisdictions identify the tax residence of their account holders, including the controlling persons behind entities, and report the accounts to those residence countries through their local authority. More than 120 jurisdictions have committed to the CRS, it upgraded to version 2.0 from 1 January 2026 to tighten reporting, and a parallel Crypto-Asset Reporting Framework extends automatic exchange to crypto assets from 2027 to 2028.

Crucially, the CRS reports by tax residence, not by where the entity is registered. A holding in a tax-neutral centre does not escape reporting; its accounts are reported to the residence countries of the people behind it. That is the point families most often misunderstand.

What it means for structures

The design consequence is to build every structure on the assumption of full reporting. Confidentiality from the public, keeping ownership out of newspapers and registries where the law allows, can still be achieved. Confidentiality from tax authorities cannot, and any structure sold on that basis is both ineffective and dangerous. Getting the CRS and FATCA classification of each entity right, whether it is a financial institution or a passive entity, and identifying the controlling persons correctly, is now a core part of setup.

Handled properly, these regimes are simply the environment in which structuring happens: report accurately, and a legitimate structure works exactly as intended. Handled as something to evade, they turn a lawful structure into a liability. This is specialist territory for tax and compliance advisers who know each relevant jurisdiction.

Frequently asked questions