FATCA & CRS reporting: reporting schemas improving tax transparency

In an era of increased cooperation between tax authorities worldwide, automatic exchange of information (AEOI) has become a cornerstone of global tax compliance. AEOI requires financial institutions, including banks, insurance companies, trust companies, and investment firms, to report client information to their local tax authority using standardised reporting schemas.

CRS (Common Reporting Standard) and FATCA (Foreign Account Tax Compliance Act) are two key reporting frameworks that support this exchange. Together, they aim to improve tax transparency, reduce tax evasion, and ensure that financial institutions collect and report accurate client data in line with international standards.

What are CRS and FATCA?

Common Reporting Standard (CRS)

The Common Reporting Standard (CRS) is a global framework developed by the OECD to enable the automatic exchange of financial account information between tax authorities.

Under CRS, financial institutions are required to collect and report client data throughout the year, including:

• Account holder name and address
• Tax residency and Tax Identification Number (TIN)
• Account balance or value
• Certain income and transaction information

Financial institutions are responsible for ensuring that the data is accurate, complete, and submitted in the correct CRS XML schema format, which may vary by jurisdiction and evolve over time.

Key facts about CRS:

• An international standard for automatic exchange of information
• Developed by the OECD to combat offshore tax evasion
• Applies to over 100 participating jurisdictions
• Covers banks, custodial institutions, certain investment entities, and insurance companies
• Operates on a reciprocal exchange model between tax authorities
• Requires ongoing due diligence and accurate data reporting

CRS plays a central role in promoting transparency and fairness across the global financial system.

Foreign Account Tax Compliance Act (FATCA)

The Foreign Account Tax Compliance Act (FATCA) is a U.S. law enacted in 2010 to identify and report foreign financial accounts held by U.S. persons.

While CRS applies globally, FATCA applies specifically to the United States and focuses on reporting U.S. taxpayers’ foreign financial assets to the IRS.

Key facts about FATCA:

• A U.S.-specific tax reporting regime
• Requires foreign financial institutions to report U.S. account holders
• Implemented globally through Intergovernmental Agreements (IGAs)
• Applies to banks, investment entities, custodial institutions, and certain insurers
• Requires identification of U.S. persons and ongoing due diligence
• Supports transparency and enforcement of U.S. tax obligations

Although CRS and FATCA differ in scope, their operational requirements are often closely aligned, leading institutions to manage both within the same reporting workflows.

Who needs to file CRS and FATCA reports?

Financial institutions subject to CRS and FATCA must submit reports annually to their local tax authority. These reports are compiled in standardised XML formats defined by each reporting schema.

Institutions must:

• Maintain accurate and well-organised client data
• Apply jurisdiction-specific reporting rules
• Validate data before submission
• Support corrections and resubmissions when required

Because CRS and FATCA requirements can vary by jurisdiction and change from year to year, staying compliant can be time-consuming and operationally complex, particularly for institutions operating across multiple countries.

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