CRS and FATCA: Automatic Information Exchange Explained

For several decades, some internationally mobile individuals maintained overseas bank accounts or investment portfolios in the expectation that foreign financial institutions would not disclose their existence to their home tax authority. In some cases, this was used for tax evasion — concealing offshore assets from HMRC or other revenue authorities. In other cases, individuals were simply unaware of their obligations.

That era ended definitively with the introduction of the US Foreign Account Tax Compliance Act (FATCA) in 2010 and the OECD's Common Reporting Standard (CRS) in 2017. Today, financial institutions in over 120 jurisdictions automatically exchange account information with tax authorities around the world. The assumption that overseas accounts are invisible to HMRC is no longer tenable.

FATCA: The American Framework

The Foreign Account Tax Compliance Act is a US law enacted in 2010 and effective from 2014. Its purpose is to ensure that US persons — citizens, green card holders, and certain resident aliens — pay US tax on their worldwide income, regardless of where they live or bank.

How FATCA works. Foreign Financial Institutions (FFIs) — banks, brokerages, investment funds, insurance companies — in countries that have signed an Intergovernmental Agreement (IGA) with the United States are required to identify accounts held by US persons and report information about those accounts to either the IRS directly or to their local tax authority (which then passes it to the IRS under the IGA).

The reporting threshold. Individual accounts held by US persons are reportable if the balance exceeds $50,000 ($10,000 for depository accounts outside a US financial institution, in some cases). Accounts held by US-owned entities are reportable at $250,000. Accounts below the threshold may still be reported in some circumstances.

The withholding stick. The mechanism that gives FATCA its teeth is the 30% withholding tax. Any FFI that fails to comply with FATCA — fails to sign up to the reporting regime and report US-person accounts — becomes subject to a 30% withholding tax on all US-source income and gross proceeds from US investments paid to it. This creates an enormous commercial incentive for overseas institutions to participate.

The practical consequence. A US citizen living in Switzerland, Cyprus, or Singapore will find that their bank has identified them as a "US person" and is reporting their account details — name, address, account number, balance, income — to the Swiss, Cypriot, or Singaporean tax authority, which passes the information to the IRS. The IRS therefore already knows about the account.

US persons abroad. The US taxes its citizens on worldwide income, regardless of residence. This makes US citizens living overseas subject to some of the most complex tax obligations of any nationality. US persons abroad must file annual FBAR (FinCEN 114) reports if their overseas accounts exceed $10,000 in aggregate at any point during the year, and FATCA reports (Form 8938) if their overseas assets exceed certain thresholds. Non-compliance carries severe penalties.

The Common Reporting Standard (CRS)

The Common Reporting Standard is the OECD's multilateral version of FATCA, developed in response to the recognition that automatic information exchange should be the global standard — not just between the US and its partner countries, but between all major jurisdictions.

CRS came into effect progressively from 2017. As of 2026, over 120 jurisdictions participate in CRS, including all major financial centres: the UK, Switzerland, Singapore, the Cayman Islands, the British Virgin Islands, Guernsey, Jersey, the Isle of Man, Luxembourg, Liechtenstein, Cyprus, Malta, and many others. Some notable non-participants (at the time of writing) include the US (which has FATCA but has not adopted CRS) and certain Gulf states (though UAE and Bahrain have adopted CRS).

How CRS works. Financial institutions in CRS-participating jurisdictions identify the tax residency of account holders. If an account holder is tax-resident in another participating jurisdiction, the financial institution reports account information to its domestic tax authority, which automatically exchanges the information with the account holder's country of tax residence.

What is reported. The standard set of information exchanged includes:

• The account holder's name, address, and tax identification number (TIN).
• The account number.
• The financial institution's name.
• The account balance or value at end of year.
• Gross amounts of interest, dividends, and other income credited.
• Gross proceeds from sales of financial assets.

The scope is broad. CRS covers not just bank accounts but also:

• Investment brokerage accounts.
• Life insurance policies with a cash value or surrender value.
• Annuity contracts.
• Custodial accounts holding financial assets.

Cash-value life insurance is a category that catches many internationally mobile individuals by surprise. An offshore bond (an insurance-wrapped investment product) typically falls within CRS reporting scope.

What It Means in Practice

HMRC already knows about your offshore accounts. If you are UK tax-resident and hold a bank account, investment portfolio, or insurance bond in Jersey, Switzerland, Singapore, or any other CRS-participating jurisdiction, HMRC receives a report of that account. It knows the balance, the income, and who holds it.

Failure to declare is not a viable strategy. The days of omitting overseas income from a UK self-assessment return in the hope that HMRC would not find out are over. The information is already with HMRC. Failure to declare it in your return creates a discrepancy between HMRC's data and your filing — which HMRC's data-matching tools are increasingly good at identifying.

Compliance is the only sensible approach. Overseas income and gains must be declared on the UK self-assessment return (Schedule 1 of the SA100 for overseas income; the Capital Gains Tax summary pages for overseas gains). The timing of declaration and the availability of any reliefs depend on your tax status.

The Liechtenstein Disclosure Facility era. The UK operated a series of offshore voluntary disclosure facilities — most notably the Liechtenstein Disclosure Facility (2010–2016) — that allowed individuals to regularise undeclared offshore assets on favourable terms. These facilities are now closed. HMRC's current approach to offshore non-compliance is significantly more aggressive, with higher penalty rates for undeclared offshore income (up to 200% in some cases).

CRS and the Non-Dom / FIG Regime

The introduction of CRS intersects with the UK's treatment of non-domiciled individuals in an important way.

Under the Foreign Income and Gains (FIG) regime (effective from April 2025, replacing the remittance basis), UK tax residents who qualify for FIG status in their first four years of UK residence can elect for their foreign income and gains to be exempt from UK income tax and CGT for that four-year period. This is a genuine exemption — not a deferral — for qualifying individuals.

However, the FIG exemption does not mean that overseas accounts need not be declared. The FIG election is an active one: the individual must elect it on their self-assessment return and declare the foreign income and gains that are being exempted. Failure to declare because the income is "exempt under FIG" is not a valid position — HMRC requires disclosure even of exempt amounts, and CRS means it already has the data.

After the four-year FIG period (or for non-qualifying individuals), all overseas income and gains are fully taxable in the UK on the arising basis. CRS ensures that HMRC has the information it needs to enforce this.

Reporting Obligations: Summary for UK Residents

UK tax-resident individuals with overseas accounts, investments, or insurance bonds should:

1. Declare all overseas accounts on the SA109 (Residence) supplementary pages and the relevant income/gains pages of the self-assessment return.
2. Report overseas income including interest, dividends, rental income, and other income from overseas sources.
3. Report overseas capital gains including gains from sales of overseas investment portfolios, property, or other assets.
4. Make the FIG election on the self-assessment return if eligible (first four years of UK residency) and intending to exempt foreign income and gains.
5. Keep records of the cost basis of overseas assets (for future CGT computation), account statements, and supporting documentation for any treaty relief claimed.

The US Citizen in the UK: A Special Case

US citizens resident in the UK face a dual reporting obligation: the UK self-assessment return for UK tax purposes, and the US tax return (Form 1040) for US purposes. In most cases, double taxation is avoided through foreign tax credits, but the compliance burden — and the cost of maintaining both US and UK tax advisers — is significant.

US citizens in the UK must also comply with FBAR (if overseas accounts exceed $10,000 aggregate), FATCA Form 8938 (if overseas assets exceed the filing thresholds), and potentially PFIC rules (passive foreign investment company rules that apply to most non-US collective investment schemes including UK ISAs and SIPPs).

The compliance cost for US citizens abroad is a significant factor in many individuals' decision-making about whether to renounce US citizenship. This is an irreversible step with major consequences and should only be considered after specialist advice.

Important Considerations

CRS and FATCA continue to develop. New jurisdictions are adopting CRS; the reporting scope and information quality exchanged improve year by year. This article reflects the general position as at June 2026 and is a general guide only. Nothing here constitutes tax or financial advice. The specific obligations for any individual depend on their tax residency, domicile, the nature of their overseas assets, and the jurisdictions involved. Always seek qualified independent tax advice, particularly if you have undisclosed overseas assets or are unsure of your reporting obligations. HMRC takes offshore non-compliance very seriously; voluntary disclosure is always preferable to investigation.

How Global Investments Can Help

Global Investments works with internationally mobile clients to ensure their investment structures — offshore bonds, overseas accounts, QROPS, and international portfolios — are properly structured, reported, and compliant with UK and overseas obligations. We advise on the FIG regime for newly UK-resident clients, on the tax treatment of offshore investment bonds and international platforms, and on the coordination of UK and overseas reporting obligations. Contact our team to arrange a consultation on your international tax and reporting position.