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cross-posted from citizenshipsolutions.ca

So, you have received bank letter asking about your tax residence for CRS or FATCA – A @taxresidency primer

Introduction – So, what’s this “tax residence” stuff about? What does “tax residence” mean?

In 2014, as people started to receive “FATCA letters” I wrote a lengthy post describing “What to do if you receive a FATCA letter“. Information exchange under the Common Reporting Standard “CRS” has begun in 2018. As a result, I am writing this post which is to explain what the CRS is and how it relates to the FATCA letter. It is important to understand that the “CRS letter is actually a combined “CRS/FATCA” letter which is more likely to be received than the original FATCA letter. I urge that those who have received a letter of this type to read this post PRIOR to seeking professional advice!!!


You are reading this post because you have received a letter from your bank that is asking you to identify the countries where you are a “tax resident” and/or whether you are a “U.S. Person”.

The purpose of this post is to help you understand:

– why you are receiving the letter
– what the letter means
– what is the meaning of “tax resident”, “tax residence” and “tax residency” (terms which are used interchangeably)
– why “tax residency” is important to you
– the significance of being a U.S. citizen or Green Card holder
– how to identify where you may be a “tax resident”

Why are you receiving this letter?

The letter is intended to fulfill the bank’s due diligence obligations under both the OECD Common Reporting Standard (all countries of “tax residence” except the United States) and FATCA (whether you are a “tax resident” of the United States).

In other words, the letter is for the purpose of satisfying bank “due diligence” under two separate reporting regimes – FATCA and the OECD Common Reporting Standard “CRS”

This is long post which is broken into the following parts:

Part A – How does FATCA differ from the “CRS”?
Part B – The Combined FATCA/CRS Letter
Part C – “Tax Residency 101”: It’s about where you should be paying your taxes
Part D – Different definitions of “tax residence” – Not all countries define “tax residence” in the same way
Part E – Oh My God! I think I might be a “tax resident” of two countries – What is a “tax treaty tie breaker”? How does a “tax treaty” tie breaker work?
Part F – A “U.S. citizen” cannot use a “tax treaty tie breaker” to break U.S. “tax residence”. How then does a “U.S. citizen” cease to be a “U.S. tax resident”?
Part G – How a “permanent resident” of the U.S. – AKA “Green Card Holder” – ceases to be a U.S. tax resident
Part H – Are you, or have you ever been a U.S. citizen or Green card holder? Sometimes it’s not what it seems.

Part A – How does FATCA differ from the “CRS”?

1. In 2014, we had the “U.S. person” FATCA inquisition, in 2018 we have the CRS “tax residence” search

2. The letter you have just received is about the CRS “tax residence” search, with a FATCA inquisition attached

3. Why the FATCA inquisition is different from the CRS “tax residence” search

4. Why the CRS “tax residence” search provides an opportunity for more FATCA inquiries

This is extremely important! The FATCA IGAs provide that (in general) CERTAIN accounts worth less than $50,000 USD are not subject to FATCA reporting. The “CRS” does NOT contain a monetary threshold. As a result, more people are receiving the combined “CRS/FATCA” letter than would have received a FATCA letter. In other words, the “CRS” inquiry has served to enhance the “FATCA Inquisition”!

John Richardson

3 thoughts on “So, you have received bank letter asking about your tax residence for CRS or FATCA – A @taxresidency primer – Part 1”

  1. Yup, I got my CRS letter from Belgium a while back. I’ve completely ignored it which presumably means the Belgians will now report my Belgian account to the UK anyway, all 200 Euro or so.

  2. When most of our European ancestors came here they were looking for a haven where the central government did not even know who they were. I long for that to be the way I end my life. Thru the Income tax forms everyone who wants a piece of your flesh simply obtains a copy of the information the government has collected on all your transactions. They have a algarythem that brings you uo to be spanked if you have not exactly conformed to a certain pattern . That call up signal does not include the 30% who have not and never will conform. The IRS knows the number of non filers, but not who they are, so they harass those who are trying to conform and that freedom by choice group skate free.

  3. Thanks for this first part. Many of us have indeed already received letters that combine fishing for FATCA and CRS information. So far I have ignored all of them, with no apparent consequence other than receiving more letters. You will be addressing the problem we have regarding our governments. Will you be addressing the problems we have with the banks, for instance the threat they are under and at what point will they no longer tolerate us ignoring them?

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