CRS and the automatic exchange of information

For years banking secrecy defined the image of the Swiss financial centre. Today that world no longer exists for cross-border relationships. Switzerland applies the automatic exchange of information (AEOI) on financial accounts according to the OECD’s CRS (Common Reporting Standard). Anyone who opens a company or holds financial assets with international links must understand that the data travels, every year, without anyone having to ask for it.

What the CRS is and why Switzerland applies it

The CRS is the global standard that requires financial institutions to identify account holders who are tax resident abroad and to transmit the information to the tax authority of their own country, which in turn automatically forwards it to the holder’s country of residence. Switzerland has signed up and exchanges data with over a hundred partner jurisdictions, including all the main European countries.

The objective is stated openly: to make assets held abroad transparent and close the gaps for non-declaration. This is not a one-off check on request, but a systematic and annual flow.

Who reports and which data

The institutions required to report are the Swiss reporting financial institutions: banks, some insurers, asset management companies and certain investment vehicles. For each account held by a person or entity tax resident in a partner country, the following are transmitted:

Identifying data of the holder (name, address, country of tax residence, tax identification number, date of birth).
Account number and details of the institution.
Account balance at year-end.
Financial income: interest, dividends, other proceeds and gains from the disposal of financial assets.

For accounts of entities — that is companies, foundations, trusts — the rule is more insidious: if the entity is considered “passive” (income predominantly from capital), the institution must look through and identify the controlling persons (the beneficial owners), also reporting their data to the country in which they reside.

Why it also concerns operating companies

Many entrepreneurs think the CRS only affects private accounts. That is not the case. A holding company, a participation company or a vehicle with predominantly passive income may be qualified as a passive non-financial entity, resulting in the reporting of beneficial owners resident abroad.

By contrast, a Swiss company with genuine operating activity — that produces, sells, provides services — is generally an active entity and does not generate reporting of its shareholders merely by existing. The difference between the two cases depends on the actual nature of the activity, not on the legal form chosen.

What the CRS does NOT cover

It is important to set the boundaries to avoid alarmism:

The CRS concerns financial accounts, not real estate or physical assets.
It concerns foreign tax residents: a person resident and correctly taxed in Switzerland does not generate flows abroad for their own Swiss accounts.
It is not an automatic admission of wrongdoing: reporting an account means only transparency, not guilt.

The practical consequence: total consistency

The real cultural change is this: what you hold must coincide with what you declare. A shareholder resident in Italy who holds shares or accounts linked to a Swiss structure must know that this data will reach their tax administration, sooner or later. International planning does not die with the CRS, but changes in nature: it is no longer based on opacity, but on economic substance and on correct declaratory compliance in every country involved.

Anyone building a cross-border structure today must start from one assumption: assume that everything is visible. The solutions that hold up are those that work even under full transparency — because that is exactly the condition in which they operate.

The most frequent mistakes

Believing that a Swiss holding company “shields” foreign shareholders: often the opposite is true.
Ignoring the foreign tax identification number when opening the account, generating inconsistencies that the institution is required to clarify.
Confusing the absence of taxation with the absence of reporting: these are different things.
Failing to coordinate the Swiss position with the declaratory obligation in the shareholder’s country of residence.

How to set things up the right way

The automatic exchange is not an obstacle, but a fact of reality to plan around. At SIH ONE we analyse the CRS qualification of each entity — active or passive — map the beneficial owners and their obligations in their respective countries, and build structures that remain solid even under full transparency, coordinating the Swiss level with the foreign one.

Do you have a structure with international links and want to check that it holds up? Let’s analyse your tax position.