Most financial institutions (traditional banks, online banks, life insurance companies, trading platforms, savings institutions, private pension providers, etc.) in developed countries classify their clients according to their tax residence, in order to automatically transmit their clients’ banking information to the country concerned: this is the automatic exchange of information under the Common Reporting Standard (CRS; in French, norme commune de déclaration, NCD).

Example: you are a French tax resident and you decide to open a bank account abroad, for instance in Hong Kong. When your account is opened, the Hong Kong bank will classify you in its internal records as a French tax resident. Consequence: every year, the bank will transmit a whole range of information about you to the French tax authorities (fisc).

The information automatically transmitted to the French tax authorities each year is as follows:

• Your name;
• Your address;
• Your country of tax residence (even if merely presumed);
• Your tax identification number(s) issued by your country or countries of tax residence;
• Your place and date of birth;
• Your account number (or substitute account number, identifying the funds you hold);
• The balance of your account or its value as at 31 December of each year during which the account is held;

The bank does not need a statement from you in order to classify you as a French tax resident. It is sufficient for it to have information allowing it to presume this: an address in France or French identity documents are the typical indicators used to presume your tax residence in France.

Banks transmit to the tax authorities of their own country the information relating to the previous calendar year, which is then exchanged between authorities no later than 30 September.

This means that every year, no later than 30 September, the information for the previous year is automatically transmitted to the French tax authorities.

The French tax authorities will then target the profiles of interest to them: generally, accounts with significant transactions or a significant balance. Significant generally means at least €100,000.

And what interests the tax authorities even more are significant changes in the balance from one year to the next.

Example : you hold an account in the United Kingdom, and last year you sold a property in the United Kingdom. The sale price of 500,000 pounds sterling was paid into your UK account. The French tax authorities receive this information : the balance has increased significantly. They will generally initiate an audit into the origin of these funds.

Another typical case may be a foreign gift, a foreign inheritance, the sale of a foreign business, significant capital gains on the sale of foreign shares, etc.