That’s right, Georgia is now a signatory of the CRS and will soon automatically exchange information on the bank accounts and businesses of non-residents with their countries of residency.
What is the CRS?
If you’re interested in this article, chances are you probably already know what the CRS is and can skip this part. Just in case you don’t, we’re talking about the Common Reporting Standard. The term is often used together with the Automatic Exchange of Information (AEOI), and they both mean the same thing: the end of bank privacy. But don’t panic just yet.
How does the Exchange of Information work?
Signatories of the CRS have an obligation to collect the following information:
- For Individuals: name, address, TIN (tax identification number), date and place of birth of each Reportable Person that is a Holder of the account and,
For Entities: name, address, and TIN(s) of the Entity
- Bank account number
- Account balance (in the case of a Cash Value Insurance Contract or Annuity Contract: the Cash Value or surrender value) as of the end of the relevant calendar year or other appropriate reporting period and, if the account was closed during the year, that fact
- For a Custodial Account (i.e., brokerage account):
- (1) gross interest, gross dividends, and gross for other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period; and
- (2) gross proceeds from the sale or redemption of Financial Assets paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder
- For a Depository Account, gross interest paid or credited to the account during the calendar year or other appropriate reporting period; and
- Any other account where the Bank is the obligor or debtor, including the aggregate amount of any redemption payments made to the Account Holder during the calendar year or other appropriate reporting period.
The information above is collected and sent to the tax authorities of the signatory countries once a year. The collector automatically sends this information in the common reporting standard in XML, every year, within 9 months from the end of the tax reporting year in a particular jurisdiction.
Who is a signatory of the CRS?
120 countries have signed on as of the end of 2023 (there’s a complete list here).
Notable countries that have yet to sign on:
Albania, Armenia, Belarus, Bosnia and Herzegovina, Macedonia (North Macedonia), Serbia, the United States (the U.S. has its own reporting standard called the Foreign Account Tax Compliance Act), and Uzbekistan
When did Georgia sign on?
Georgia became a signatory of the CRS in 2022. The first reporting year is 2023, which also means that the first information from Georgian banks will be sent to the relevant tax authorities in September 2024.
Who is reportable?
i.e., who’s information is going to be collected and sent?
A Reportable Person is an individual who is a tax resident in a Reportable Jurisdiction under the laws of that jurisdiction. This means that neither citizenship, nor any other characteristics apart from the tax residency is important. Banks will inquire into a client’s tax residency and send the relevant information. If the client is a tax resident of any other country apart from the country where the account is, information will be sent. If the client is a tax resident of the same country where the account is, then the information will not be sent.
Can I be a tax resident of Georgia?
Yes!
There are two ways to become tax resident of Georgia.
- Spend 6 months out of any 12-month period here and you automatically become a tax resident
- Take part in the HNWI tax residency program, which doesn’t require that you live in Georgia to grant you tax residency. We’ve discussed the program and recent changes to it in this article
In summary
Georgia has become a signatory of the CRS and will automatically start exchanging information on the holders of bank accounts in 2023 (with the first report to be sent in Sept. 2024). The CRS guarantees the personal information of account holders, their numbers, balances, the movement of funds will be reported in a standardized manner to the relevant tax authorities. Anyone who wants to avoid being reported should either open an account in a country that is not a CRS signatory or become a tax resident in a country of a CRS signatory. Georgia offers flexible solutions to anyone who does not want to be subject to reporting requirements.
OK, you can panic now.
