CRS：The rich man's magic mirror

CRS：Rich people’s magic mirror when it comes to CRS，Some people may not be very clear yet，After all it doesn't affect everyone，But for those businessmen，Especially for businessmen who transfer most of their assets abroad to avoid taxes.，So the impact of CRS is very large。What is CRS? The full name of CRS (CommonReportingStandard)，Translated into Chinese as "Common Reporting Standards"。

2014Year，OECD(OECD)Released the Standard for Automatic Exchange of Financial Account Information，Aims to combat cross-border tax evasion，CRS is included in the standard。CRS is a new set of standards for the automatic exchange of international tax information。

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Systematic and regular automatic exchange of information between signatory countries，This enables the taxpayer's country of residence and the country where the taxpayer's account is located to automatically share various financial information of taxpayers in overseas financial institutions such as banks and securities accounts.，such as dividends、Bonuses etc.。CRS will involve all aspects，including tax、law、Corruption、Asset allocation、Overseas insurance、family trust、private equity funds、P2P、Wealth management practitioners、Immigration etc.。

CRS flow chart additionally，CRS has a “voluntary matching” principle，That is, in CRS participating countries(or region)between，Each subject is free to choose to "match" with other subjects，information exchange only later。China joins CRS China will join the CRS Agreement on December 17, 2025，Commitment to become the second batch of countries to implement CRS(area)。

October this year，The State Administration of Taxation issued the "Draft for Solicitation of Opinions on the Management Measures for Due Diligence of Tax-Related Information on Non-Resident Financial Accounts"。Please click here to enter the image description. As of July 2025, 101 countries and regions have committed to actively implement and implement CRS.。Who specifically will CRS affect?

People affected by CRS can be divided into two categories:：The first type is Chinese tax residents with overseas financial accounts，i.e. any financial assets owned outside China，Such as deposit、securities、Investment insurance products、investment fund、Trust, etc.，All may be regarded as local non-resident financial accounts and exchange information with the Chinese tax bureau.。

The second type is non-Chinese tax residents with financial assets in China.，That is, financial accounts in China will be regarded as "non-resident accounts" in China.，Their account information will be collected、Submit，exchanged to the country of its tax residence。If all your assets are within the country，Then CRS has nothing to do with you at all。Secondly，CRS exchanges financial asset information，real estate、jewelry、sports car、Physical assets such as yachts do not need to be exchanged，No need to exchange cash。

One more thing，Only if your overseas assets happen to be in a CRS participating country，Your overseas assets will be exchanged。Please click here to enter a picture describing the type of assets that need to be declared：

1. deposit account
2. Escrow account
3. Other accounts refer to accounts that meet one of the following conditions：Equity or debt rights of investment institutions，Including partnership interests in private investment funds and beneficial interests in trusts；Insurance contract or annuity contract with cash value。

Here are 2 more points to remind everyone 1、2025After the implementation of CRS on January 1,，There will be some changes for individual customers when opening a new financial account overseas.，The biggest change is that you need to provide a declaration of tax residency status (SelfCertification) when opening an account.。

Secondly，During the process of opening an account，In order to avoid risks, financial institutions，Will sign a disclaimer with the customer，

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Customers make commitments，If the identity changes in the future，Must be declared to the financial institution within 30 days。2、Clients who conceal or misreport their tax residency status will have serious consequences if they intentionally conceal or misreport their tax residency status.，If found, they will be included in the money laundering list for relevant investigation.。

Hong Kong law stipulates that customers who conceal or forge their tax residency status will be fined HKD 10,000.，And financial institutions will not only be fined，The client will also face a prison sentence of up to 3 years。Question one：Can I avoid CRS declaration if I hold a second passport? uncertain。For example, although a Chinese entrepreneur holds a second passport，But his company’s actual business location is still in China.，He also spends most of his time in China，Including family members also living in China。

from a tax perspective，Will he still be deemed to be a tax resident in China?。Under the CRS system，Nationality is not necessarily a signal of tax residency，CRS is judged based on the country where you currently live.。When financial institutions decide on the specific countries to which information will be exchanged，The location of personal tax residence is crucial，Because the place of tax residence will determine which country’s tax authority the tax information is provided to.。

Please click here to enter the image description Question 2：Is there any risk in avoiding CRS declaration through equity holding? Equity holding without being discovered by the bank，The actual controller can avoid CRS declaration。But the agent may face risks，Because all account-related appearances are made by this agent.。Then the National Taxation Bureau where the agent is located will always receive the account information of the overseas company.，The source and tax payment status of relevant assets that may be traced。

Question three：Can establishing a trust avoid CRS reporting? Trusts are basically useless under CRS。Because the trust creator、trustee、Both the protector and the beneficiary are within the scope of CRS information disclosure。But the beneficiaries will be a little more complicated，Because the beneficiaries are divided into fixed beneficiaries (it is clear how much money will be distributed) and arbitrary beneficiaries (the specific amount of money has not been decided yet)。

Fixed beneficiaries will be included in the scope of declaration from the beginning，Any beneficiary will have to wait until he receives the first payment before he can file a declaration.。There is a situation：Can the CRS filing be avoided if the trustee does not distribute the money to the beneficiary but lends it to the beneficiary? Because it’s hard to define whether this counts as income distribution，Do you want to repay this borrowed money? How long will it take to pay back? Do you have the ability to repay?

I think this loophole should be closed by the OECD in the future. Question 4：What insurances need to be declared under CRS? What does not need to be declared? 1. Insurance without cash value does not need to be declared。What does it mean to have no cash value?

If I cancel my policy，can get the money back，No matter what kind of insurance policy it is，As long as I can get a penny，It is a policy with cash value. If I cannot withdraw money from a policy,，But I can use it as a mortgage，Also considered to have cash value。Therefore, basically Hong Kong’s large insurance policies are considered to have cash value.。2.Policies purchased in non-CRS participating countries do not need to be declared。

But it is only temporarily unnecessary to declare，Because we do not rule out the possibility that other countries may apply to join CRS in the future.。Question 5：Someone once proposed，I saw that the United States has not joined CRS.，Then if I transfer all the money to the United States, won’t that be the end of it?

That's right，The United States is not currently a member of the CRS，But the United States has a FATCA act (similar to CRS)，Now this customer goes to the United States to open an account，put money in，Before joining CRS in the United States，Or before China and the United States sign the two-way FATCA agreement，This US account can indeed circumvent CRS or FATCA。But when customers make any plans，Don’t just think about the present。

Please click here to enter image description My idea is：The FATCA agreement began in the United States，CRS is just a replica，Therefore, it seems very likely that China and the United States will sign a bilateral FATCA agreement.。for example，The United States and India have signed a bilateral FATCA agreement。

But there is still a variable：Under the FATCA Act，Financial account information exchange is generally one-way，That is to say it will

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Other countries unilaterally provide the United States with information on U.S. tax residents abroad.，Free services，The Chinese government will definitely not do it，Because the original intention of China joining CRS was to recover the taxes that the rich in the country had evaded.，The one-way FATCA bill means nothing to China，So China will definitely

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Sign the two-way FATCA bill，But this two-way

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，The United States needs to revise its current legal framework。

This is a bit tricky，Because the legal process of amending the United States is very complicated，And after the new leader came to power,，Laws passed by the previous president may also be repealed，There is also news that after Trump took office，Republicans plan to repeal FATCA。And I personally think，The United States has not joined CRS yet，Doesn't mean he won't join in the future。It sounds a bit nonsense，So let me make a summary。

1. Will the United States sign a two-way FATCA or CRS with China?。
2. That won’t be possible under Trump.。Another thing to note is that，Many clients have set up a trust structure in the United States，Then use this trust to invest in CRS participating countries such as Hong Kong or the Cayman Islands.，Then the trust itself will be defined as a non-active financial entity under CRS。

in this case，Even if the United States does not join CRS，But as long as he has a financial account in a member country of CRS，When the account-opening institution of this financial account undergoes due diligence,，will be penetrated to the actual controller of this non-active financial entity，Still can't escape this way。Having said so much，Let me make a summary，How to effectively deal with CRS：1、Asset replacement。

CRS is for exchanging financial account information，But if you convert the assets into physical objects,，Such as real estate、jewelry、sports car、cash，Can circumvent CRS，This method is the simplest。2、Change tax residency。

Under the CRS system，Nationality is not necessarily a signal of tax residency，CRS is judged based on the country where you currently live.，Different CRS signatory countries have different conditions for determining tax residents.，For example, the condition for determining tax residency in China is that the individual has a fixed residence in China.，Or have lived in China for one year。

If you can clearly understand the conditions for determining tax residency in different countries，Make reasonable arrangements for your stay at home and abroad，You can also exploit the loopholes of CRS。

Many people say that CRS can be avoided as long as the account assets are less than US$1 million.，This is actually a misunderstanding，It was said in the government’s “Measures for the Administration of Due Diligence of Tax-Related Information on Non-Resident Financial Accounts”，Special attention will be paid to accounts with account assets exceeding RMB 6 million.，But it did not say that there is no need to declare if it is less than 6 million yuan.。

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