FATCA & CRS: What Gets Reported to Tax Authorities

What Is FATCA?
FATCA is US legislation enacted in 2010 requiring foreign financial institutions (FFIs) to report information about US persons' accounts to the IRS—or face 30% withholding on US-source payments.

Who It Affects:

• US citizens (including those living abroad)
• US permanent residents (green card holders)
• US tax residents (substantial presence test)
• US entities and their beneficial owners

What Portuguese Funds Report:
Portuguese financial institutions, including fund administrators, report the following to the IRS (via Portuguese tax authorities):

1. Account Holder Information

   • Name, address, US TIN (Tax Identification Number)
   • Account number and account type

2. Account Balance

   • Year-end balance in USD equivalent

3. Income

   • Gross dividends, interest, other income
   • Gross proceeds from sales or redemptions

The Model 1 IGA:
Portugal has a Model 1 Intergovernmental Agreement with the US. This means:

• Portuguese FFIs report to Portuguese authorities
• Portuguese authorities share with the IRS automatically
• No direct FFI-to-IRS reporting required

Your FATCA Obligations:
As a US person, you must also self-report on:

• FBAR (FinCEN 114): Foreign accounts exceeding $10,000 aggregate value
• Form 8938: Specified foreign financial assets exceeding thresholds
• Form 8621: PFIC reporting (covered separately in our PFIC guide)

Bottom Line:
Assume the IRS will know about your Portuguese Golden Visa investment. Plan your compliance accordingly.

What Is CRS?
The Common Reporting Standard is an OECD-developed framework for automatic exchange of financial account information between participating jurisdictions. Over 100 countries participate, including all EU member states, the UK, and major financial centers worldwide.

Who It Affects:
All non-US persons who are tax residents of CRS-participating jurisdictions. This includes:

• EU residents
• UK residents
• Residents of most developed countries
• Many emerging market country residents

What Gets Reported Under CRS:

1. Account Holder Information

   • Name, address, jurisdiction of residence
   • Tax identification number(s)
   • Date and place of birth

2. Account Information

   • Account number
   • Name and identifying number of the reporting institution
   • Year-end account balance or value

3. Income and Gross Proceeds

   • Dividends, interest, and other income
   • Gross proceeds from sale or redemption of financial assets

The Reporting Chain:

1. Portuguese fund administrator collects your information
2. Reports to Portuguese tax authority (AT) annually
3. AT shares with your home country tax authority
4. Your home authority receives data by September following the reporting year

CRS 2.0 Changes (Effective January 2026):
The updated framework expands scope to include:

• Cryptocurrency and other digital assets
• Non-financial intermediaries
• Indirect real estate holdings
• Enhanced beneficial ownership requirements

Key Takeaway:
CRS creates near-global tax transparency. Your home tax authority will know about your Portuguese investment automatically.

Self-Certification Requirements:
When you invest in a Portuguese fund, you'll be required to provide self-certification of your tax residency. This typically includes:

• Tax residency declaration: Where you're tax resident
• Tax identification numbers: For each country of residence
• Confirmation of status: Whether you're a US person, Politically Exposed Person, etc.

Documentation You'll Need:

1. Passport or ID
   Standard KYC identification

2. Proof of Address
   Utility bill, bank statement, or official document

3. Tax Identification Number
   Your TIN from your country of tax residence

4. FATCA Status Declaration (if US person)
   W-9 or W-8BEN depending on your status

Ongoing Obligations:
You must notify the fund if your circumstances change:

• Change of tax residence
• Acquisition or loss of US person status
• Change of address
• Change of tax identification numbers

Consequences of Non-Compliance:
If you don't provide required information:

• Fund may refuse or delay your subscription
• Fund may report you as "undocumented" (worse for you)
• Potential withholding at maximum rates
• Possible account closure

Practical Tip:
Gather your documentation before initiating fund subscription. Having everything ready speeds the process significantly.

Annual Reporting Cycle:

Timing:

• Reporting period: Calendar year (January-December)
• Report submission: By June 30 following the reporting year
• Exchange with partner jurisdictions: By September 30

Information Categories:

1. Account Holder Details

   • Full legal name
   • Current address
   • Country of tax residence
   • Tax ID number(s)
   • Date of birth
   • Place of birth (FATCA and CRS 2.0)

2. Account Details

   • Account number or equivalent
   • Account type (custody, depository, etc.)
   • Currency
   • Reporting institution details

3. Financial Information

   • Year-end account balance
   • Total gross interest paid or credited
   • Total gross dividends paid or credited
   • Gross proceeds from sales or redemptions
   • Other gross income paid or credited

What's NOT Reported:

• Tax advice you've received
• Your reasons for investing
• Personal financial planning details
• Non-financial personal information

Data Protection:
Information exchanged is subject to data protection rules and confidentiality requirements. Tax authorities can only use it for tax purposes—not shared with other government agencies or made public.

Proactive Compliance Is Essential:
Given automatic reporting, the only sensible strategy is full compliance. Tax authorities will receive information about your investment—you should report it first.

Before Investing:

1. Understand Your Obligations
   Know what you must declare in your home country:

   • Foreign asset declarations (e.g., FBAR, Modelo 720, etc.)
   • Foreign income reporting
   • Specific fund reporting requirements

2. Engage Tax Advisors
   Work with advisors who understand cross-border compliance before you invest, not after.

3. Document Everything
   Create a file for your Golden Visa investment containing:

   • Subscription documents
   • Self-certification forms you submitted
   • Annual statements from the fund
   • Tax filings related to the investment

During Investment:

1. File Timely
   Meet all deadlines for foreign asset and income reporting.

2. Keep Records Updated
   Notify funds of any status changes promptly.

3. Reconcile Information
   Ensure what you report matches what the fund reports.

If You've Made Mistakes:

Most jurisdictions offer voluntary disclosure programs for taxpayers who failed to report correctly. These typically offer:

• Reduced penalties
• Avoiding prosecution in most cases
• Opportunity to correct records

Coming forward proactively is almost always better than waiting to be contacted. Consult a tax attorney if you have unreported foreign assets.

"My country doesn't participate in CRS."
Very few countries are outside CRS. The US doesn't participate in CRS but has FATCA, which achieves similar results. Check the OECD's participating jurisdiction list—you're almost certainly covered.

"My investment is small; they won't report it."
CRS has no minimum threshold—all accounts are reportable regardless of balance. FATCA has thresholds, but Portuguese institutions typically report all US persons regardless.

"I'll just not provide my TIN."
Funds will still report you—just as an "undocumented" account, which flags you for closer scrutiny. This is worse than providing complete information.

"Information sharing is unreliable."
The exchange networks are mature and operational. Assuming information won't reach your tax authority is a dangerous bet.

"I can use a structure to avoid reporting."
Both FATCA and CRS include look-through rules for certain entities. Passive investment vehicles are reported at the beneficial owner level. Structures designed primarily for tax avoidance often increase, not decrease, scrutiny.

"If I become Portuguese resident, reporting stops."
You'd then be subject to Portuguese tax rules instead. And if you're a US citizen, FATCA still applies regardless of residence. Changing residence changes who you report to—not whether you report.