CRS: Common Reporting Standard Definition and Swiss Implementation

Definition

The Common Reporting Standard (CRS) is a global framework for the automatic exchange of financial account information between tax authorities, developed by the Organisation for Economic Co-operation and Development (OECD) and endorsed by the G20. Under CRS, financial institutions in participating jurisdictions collect and report information about accounts held by foreign tax residents to their domestic tax authority, which then exchanges this information with the tax authorities of the account holders’ countries of residence.

Purpose

CRS is designed to combat tax evasion by ensuring that individuals and entities cannot conceal financial assets in foreign jurisdictions beyond the reach of their home tax authorities. By establishing a standardised, multilateral framework for automatic information exchange, CRS eliminates the need for bilateral tax information exchange agreements for routine purposes and provides tax authorities with comprehensive visibility into the offshore financial activities of their residents.

How CRS Works

Information Collection

Financial institutions — including banks, custodians, investment entities, and certain insurance companies — are required to identify accounts held by persons who are tax residents of CRS-participating jurisdictions. Identification relies on self-certification by account holders (typically through tax residency declaration forms) supplemented by due diligence procedures that require the institution to verify the plausibility of the declared tax residency.

Reportable Information

For identified reportable accounts, institutions must collect and report the following information:

• Name, address, jurisdiction of tax residence, and tax identification number (TIN) of each account holder
• Account number
• Name and identifying number of the reporting financial institution
• Account balance or value at the end of the reporting period
• Total gross amount of interest, dividends, and other income credited to the account
• Total gross proceeds from the sale or redemption of financial assets

Reporting and Exchange

Financial institutions report the collected information to their domestic tax authority — in Switzerland, the Federal Tax Administration (FTA). The FTA then exchanges this information with the tax authorities of each account holder’s jurisdiction of tax residence, provided that a bilateral exchange relationship exists between Switzerland and that jurisdiction.

Exchange occurs on an annual basis, typically in the autumn of the year following the reporting period.

Swiss Implementation

Switzerland adopted CRS through the Federal Act on the International Automatic Exchange of Information in Tax Matters (AEOIA), which entered into force on 1 January 2017. The first exchanges of information took place in 2018, covering account data from the 2017 reporting period.

Participating Jurisdictions

Switzerland exchanges CRS information with over 100 partner jurisdictions. The list of exchange partners is established through activated exchange relationships based on the Multilateral Competent Authority Agreement (MCAA) or bilateral agreements. The FTA publishes the current list of activated exchange relationships.

Reporting Financial Institutions

In Switzerland, the following entities are classified as reporting financial institutions under CRS:

• Banks (including private banks and cantonal banks)
• Securities dealers and custodians
• Certain collective investment schemes
• Certain insurance companies (for investment-type products)

FINMA-supervised institutions are responsible for implementing CRS due diligence and reporting procedures as part of their regulatory compliance obligations.

Due Diligence Procedures

Swiss financial institutions must apply CRS due diligence procedures to identify reportable accounts:

New accounts. At account opening, institutions must obtain a self-certification of tax residency from the account holder. The certification must be validated against documentary evidence and assessed for reasonableness.

Pre-existing accounts. Accounts that existed before the CRS implementation date are subject to review procedures based on existing records and, where necessary, outreach to account holders for updated information.

Entity accounts. For accounts held by entities, institutions must determine the entity’s CRS classification and, for passive entities, identify and report on the controlling persons (beneficial owners) who are tax residents of reportable jurisdictions.

Impact on Swiss Banking

CRS has had a transformative impact on the Swiss financial centre:

End of undeclared accounts. The automatic exchange of financial information has effectively eliminated the possibility of maintaining undeclared accounts in Switzerland. Financial institutions must report account information regardless of banking secrecy protections, which are overridden by the CRS legislation for exchange purposes.

Client tax compliance. Swiss banks have significantly enhanced their focus on client tax compliance, requiring evidence of tax compliance as part of their onboarding and ongoing due diligence processes.

Compliance costs. CRS implementation has imposed substantial compliance costs on Swiss financial institutions, including system development, staff training, data collection, and reporting. RegTech solutions have become increasingly important for managing these obligations efficiently.

Market repositioning. The Swiss financial centre has repositioned its value proposition from confidentiality-based advantages to competence-based advantages — emphasising investment expertise, stability, and service quality rather than information opacity.

Relationship with FATCA

CRS is conceptually derived from the US Foreign Account Tax Compliance Act (FATCA), which preceded it. Both frameworks require financial institutions to identify and report on accounts held by foreign tax residents. Key differences include:

• Scope. CRS is multilateral (100+ jurisdictions); FATCA is bilateral (US only)
• Reciprocity. CRS is reciprocal; FATCA reciprocity from the US is limited
• Tax residency basis. CRS uses tax residency; FATCA uses US citizenship, residency, and certain indicia

Swiss financial institutions must comply with both CRS and FATCA, as the two frameworks operate in parallel with overlapping but distinct requirements.

Practical Implications

For individuals with accounts at Swiss financial institutions, CRS means that account information is routinely shared with their country of tax residence. Clients should ensure that:

• Their tax residency self-certifications are accurate and current
• Their offshore financial assets are properly declared in their domestic tax returns
• They seek professional tax advice if they have complex multi-jurisdictional arrangements

For financial institutions, CRS compliance is a core regulatory obligation, integrated with broader AML and tax-efficient investing advisory processes.

Donovan Vanderbilt is a contributing editor at ZUG FINANCE, the Swiss private banking and fintech intelligence publication of The Vanderbilt Portfolio AG, Zurich. He covers wealth management, institutional finance, and regulatory affairs across the Swiss financial centre.