Georgia joined the Common Reporting Standard (CRS)—a global initiative designed to combat tax evasion through the automatic exchange of financial information between countries. This move aligns Georgia with over 100 jurisdictions committed to fiscal transparency. In this article, we’ll explain what CRS is, how it operates globally, and how its implementation in Georgia affects individuals and businesses.
What Is the Common Reporting Standard (CRS)?
The Common Reporting Standard (CRS) was developed by the OECD (Organisation for Economic Co-operation and Development) in 2014. It sets out a framework for jurisdictions to automatically exchange financial account information with other countries on an annual basis. The goal is to reduce offshore tax evasion by ensuring that taxpayers cannot hide income or assets in foreign accounts undetected.
Simply put, if you’re a tax resident of one country but have financial accounts in another CRS-participating country, that second country will report your account information to your country of tax residence.
What Kind of Information Is Shared?
Under CRS, Georgian financial institutions must collect and report detailed information on financial accounts held by non-residents. This includes:
- Name, address, and taxpayer identification number (TIN) of the account holder
- Account number and financial institution details
- Account balance or value
- Interest, dividends, and other income generated
This information is then sent to the Georgian Revenue Service, which shares it with the respective country of tax residency.
How Is Tax Residency Determined?
Identifying the correct tax residency of account holders is a critical step in CRS compliance. In Georgia, financial institutions typically rely on Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures to determine this.
Key factors may include:
- The habitual residence of the account holder
- Self-certification forms provided by the client
- Supporting documents such as utility bills or national ID cards
However, self-declared information must be supported by documentation, and the law does not yet clearly define which documents are acceptable—leaving room for regulatory interpretation.
CRS vs. FATCA: What’s the Difference?
It’s important to note that while the United States is not a CRS participant, it operates under a similar system called FATCA (Foreign Account Tax Compliance Act). Georgia is also a FATCA signatory, meaning Georgian financial institutions report information about U.S. account holders directly to the U.S. IRS.
Unlike CRS, which is multilateral, FATCA is a series of bilateral agreements between the U.S. and other countries.
What This Means for Taxpayers in Georgia
For individuals and businesses with financial accounts in Georgia or abroad, CRS introduces new compliance responsibilities and reduces anonymity in cross-border banking. If you’re a Georgian tax resident with accounts in other CRS-participating countries—or vice versa—your financial information may now be subject to automatic exchange.
This development has key implications:
- You must ensure proper tax reporting of any foreign income or accounts
- There may be increased scrutiny of international financial activity
- Mistakes in residency status or unreported assets can lead to penalties
Final Thoughts
Georgia’s integration into the CRS network marks a significant step towards global financial transparency and responsible tax administration. As the CRS framework becomes more deeply rooted in Georgian law, individuals and entities operating internationally should seek professional guidance to remain compliant and avoid unintended tax consequences.
For the latest updates and help navigating CRS requirements in Georgia, feel free to consult with a tax advisor or legal expert familiar with international tax obligations.
