Anna Golubovskaya web Lawyer in International Law
What is CRS?
CRS is an international standard for the exchange of tax information developed by the Organization for Economic Cooperation and Development (OECD). Its goal is to reduce tax evasion by automatically exchanging information about financial accounts between the participating countries.
In simple words, it is a global system that allows countries to learn about the financial assets of their residents abroad. For example, if you are a tax resident of Ukraine, but have a bank account in another country, this information may be transferred to the tax authorities of Ukraine.
How does it work?
1. The Bank collects data. When you open an account, the bank checks whether you are a tax resident of a country other than the one where the bank is located.
2. Information transfer. Once a year, banks transfer data on cash accounts to the tax authorities of their own country.
3. Exchange of information between countries. The tax authorities of the country where the bank is located transmit the information to the tax authorities of your country of residence.
Who cares about CRS?
CRS applies to individuals and legal entities who are tax residents of one country but have financial accounts in another country. If you have a business or you keep funds abroad, it is important to check your tax residency status.
You can find out your tax residency status using a special test on the website.
What information is being transmitted?
Banks transmit the following data:
• Name, date and place of birth, current registration address;
• Taxpayer Identification Number (TIN);
• Account information (balance at the end of the year, income, dividends, interest, etc.).
CRS in Ukraine
Since Ukraine joined the exchange, Ukrainian banks have already started updating information about their clients and send requests regarding tax residency.
Legislation obliges banks to collect and transfer this information to the tax authorities of Ukraine, which, in turn, can transfer it to other countries.
Fines: If the account holder provides the bank with documents with incorrect or incomplete information, the fine is 100 minimum wages at the time of the violation (for 2025 it is 800,000 UAH).
According to the explanations of the Ministry of Finance, the exchange of information on accounts of non-residents opened in Ukraine takes place in stages:
• 2024: transfer of information about accounts whose balance exceeds 1 million US dollars, opened before July 1, 2023. And information on all new accounts opened after July 1, 2023
• 2025: transfer of information on accounts with a balance exceeding 250 thousand US dollars opened before July 1, 2023.
• 2026: exchange of information about all accounts, regardless of their size.
These stages mean that in 2024 the main focus will be on large accounts of individuals and legal entities. However, starting in 2026, information about all financial accounts, regardless of the amount, will be included in the exchange.
What are the risks?
1. Penalties and sanctions. For incorrectly provided information, you can receive significant fines or even account blocking.
2. Additional taxes. If you do not declare income earned abroad, there may be problems with the Ukrainian tax authorities.
3. Legal consequences. If tax evasion is detected, you may become the subject of an investigation.
Is it possible to avoid CRS?
I can note that the possibilities of completely avoiding CRS are limited, since the system is designed for global transparency. At the same time, there are legitimate strategies in place to minimize risks in order to avoid possible adverse tax consequences.
Here are the main approaches:
1. Change of tax residence
If you no longer want to be a tax resident of a country participating in the CRS (for example, Ukraine), you can change your residence to a country that is not a member of the CRS. For example, Maldives, Macedonia, USA, Cambodia. But this will not give you long-term guarantees, as the list of countries that have joined the exchange is constantly growing. To date, 125 countries have already participated in the CRS.
Important! The change of residence must be realistic and confirmed by real circumstances: residence, business, family ties.
2. Business structuring
For business owners, structuring a holding company through the involvement of actual funds or trusts that do not have a direct beneficiary may be a solution in some situations. However, such structures must comply with the laws and not be used for tax evasion, as this can lead to serious consequences.
Using a multi-level ownership structure with companies in different jurisdictions will not help avoid CRS, since when opening an account you must show the bank the entire ownership structure of the company to its final beneficial owner.
It is important to remember:
Any actions to avoid CRS must be within the law. Outright CRS or tax evasion can have serious consequences, including fines, criminal prosecution, and reputational risks.
If you have a specific situation, I recommend that you seek personal advice on developing a legitimate and effective strategy.
