CRS for residents in Spain and LATAM: real implications explained

120 countries since 2017. If you live in Spain or Latin America and hold accounts abroad, the OECD Common Reporting Standard directly affects what your tax authority knows. We break down what's reported, when, and why it matters for your US LLC.

CRS has been moving bank balances between more than 120 countries since 2017, and a Spanish tax resident with an account in Andorra, Switzerland or Mexico will see that data land at the tax office every September.

The Common Reporting Standard (CRS) is the most important piece of international tax compliance of the last decade, and very few people understand what it actually means for someone who owns a <a href="/en/blog/us-llc-for-non-residents-tax-structure">US LLC</a> or holds bank accounts outside their country of residence. Let's break it down with technical precision and without alarmism.

CRS 2.0, CARF and DAC8 for CRS for residents in Spain and LATAM

For residents of Spain and Latin America, the first concrete impact lands through DAC8: Directive (EU) 2023/2226 transposes CRS 2.0 + CARF into EU law and cascades down into the AEAT's Modelo 289 and the equivalent Latin American regimes that subscribe the updated MCAA.

The OECD adopted an integrated package combining CRS 2.0 (the revised Common Reporting Standard, which brings EMIs and specified electronic-money products into the perimeter and tightens due diligence on controlling persons) and CARF (the Crypto-Asset Reporting Framework, which extends automatic exchange to crypto exchanges, custodians and crypto-derivative platforms). The European Union transposed it through Directive (EU) 2023/2226 (DAC8), adopted on 17 October 2023, which amends Directive 2011/16/EU to incorporate both components. The substantive application date is 1 January 2026 and the first effective exchange lands in January 2027 over the prior reporting period.

Official sources: <a href="https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/" target="_blank" rel="noopener nofollow">OECD — CRS</a>, <a href="https://www.oecd.org/tax/exchange-of-tax-information/crypto-asset-reporting-framework-and-amendments-to-the-common-reporting-standard.htm" target="_blank" rel="noopener nofollow">OECD — CARF</a>, <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023L2226" target="_blank" rel="noopener nofollow">EUR-Lex — Directive (EU) 2023/2226 (DAC8)</a>.

For residents in Spain or Latin America, the first question is residence law, not the marketing label of the account. CRS may move data automatically when a participating financial institution is involved; US banking follows a different perimeter; domestic reporting duties may still exist. The structure has to be analysed country by country. We unpack the broader privacy layer in <a href="/en/blog/crs-carf-and-us-banking-privacy-for-llc-owners">CRS, CARF and US banking privacy for your LLC</a>.

What CRS is and why it exists

The Common Reporting Standard was approved by the OECD Council in July 2014 in response to the G20 mandate after the financial crisis and the major tax-evasion scandals (LuxLeaks, Panama Papers). The objective is straightforward: tax authorities of adhering countries automatically exchange information about financial accounts held by non-residents.

Technically, CRS generalizes the previous model (FATCA) to more than one hundred jurisdictions, but on a multilateral rather than bilateral basis. Spain transposed it via Royal Decree 1021/2015 and Order HAP/1695/2016, which regulate Form 289 (the annual informative return that Spanish financial institutions submit to the AEAT, and which Spain receives in reverse from other adhering countries).

In Latin America CRS has been implemented, among others, in: Mexico (since 2017), Argentina, Colombia, Chile, Brazil, Uruguay, Panama, Peru, Costa Rica, Ecuador and the Dominican Republic. The United States, importantly, is not adhered to CRS. It runs its own system (FATCA), which is bilateral and outbound only, not inbound. We dive deeper into this in our article on <a href="/en/blog/us-llc-bank-accounts-fatca-crs-and-privacy">whether US bank accounts report to your tax authority</a> and, to understand why the US will not sign the new version either, in <a href="/en/blog/crs-carf-and-us-banking-privacy-for-llc-owners">CRS, CARF and US banking privacy</a>.

CRS connects tax residence to reportable financial accounts

• OECD: Common Reporting Standard, July 2014. Consolidated text and official commentaries.
• EU: Council Directive 2011/16/EU on administrative cooperation (DAC), amended by DAC2 (Directive 2014/107/EU), which incorporates CRS into Union law.
• Spain: Royal Decree 1021/2015, Order HAP/1695/2016, Order HAC/3625/2003 (Modelo 720), Order HFP/886/2023 (Modelo 721 for crypto-assets held abroad).
• Multilateral Competent Authority Agreement (MCAA): the OECD instrument by which each country activates bilateral exchange with each of the others. Spain has activated exchange with virtually every EU country and with most adhering jurisdictions.

What information is reported exactly

Each Reporting Financial Institution (bank, broker, fintech with banking license, investment fund, insurance company with investment products) that detects an account holder whose tax residence differs from the country where the account is held must report:

The flow is annual, typically between May and September of the year following the reported period, and is then cross-checked against the taxpayer's filings (in Spain: IRPF, Modelo 720 and, after the latest reform, Modelo 721 for crypto-assets).

What happens with your US LLC: the nuance almost no one explains

Here is where the misunderstandings begin. Let's nail down the concepts:

1. The US does not send data via CRS. Mercury, Relay or any US regional bank will not directly send data to AEAT, SAT, DIAN or AFIP through CRS. What the US runs is FATCA, which is unilateral outbound: it requests data from foreign institutions about US-person accounts, but does not automatically send equivalent data the other way (it does in some cases through Model 1 IGAs, but at far smaller scope than CRS).
2. Your LLC is most likely a passive NFE, unless it can demonstrate real operational activity (more than 50% of income is operational and not passive items such as dividends, interest, rents or royalties unconnected to a business). For the typical freelancer with a single-member LLC invoicing services, there is room for debate: a literal CRS reading would treat the LLC as an active NFE (operating business), but the European fintech typically classifies it as a passive NFE out of caution, which triggers reporting of the controlling persons. This nuance escapes almost everyone.

How CRS tax residence is determined

The financial institution applies a due diligence procedure (RD 1021/2015 and CRS Annex I) based on the holder's self-certification plus objective indicia: postal address, phone number, recurring IP, declared TIN, repeated transfer instruction to accounts in another country, powers of attorney granted to residents in another country.

If your self-certification states "tax resident in Andorra" but your IP, card delivery address and recurring transfers point to Madrid, the institution may request additional documentation (tax residence certificate issued by the competent tax authority, lease agreement, etc.) or, in case of doubt, report to both jurisdictions. False CRS self-certification is a tax offence in most jurisdictions and may carry criminal consequences if it concurs with material undeclared liabilities (in Spain, art. 305 of the Spanish Criminal Code if thresholds are crossed).

Real implications in Spain (Modelo 720 and Modelo 721)

If you are a Spanish tax resident and you have:

• Foreign accounts with individual or aggregate balance above €50,000 at 31 December or as average balance in the last quarter: Modelo 720 informative return (see our <a href="/en/blog/modelo-720-and-721-guide-for-llc-wise-and-crypto">complete guide to Modelo 720 and 721</a>), first filing in March of the following year; subsequent filings only if there is a variation of more than €20,000 in any heading.
• Foreign crypto-assets above €50,000 at 31 December: Modelo 721.
• Foreign securities, rights, insurance, income above €50,000: Modelo 720, corresponding sections.

The CRS cross-check allows the AEAT to detect omissions almost in real time relative to the reported period. The CJEU judgment C-788/19 (27 January 2022) struck down the originally disproportionate sanction regime of Modelo 720 for being contrary to Union law, but the obligation to report remains fully in force with ordinary penalties (LGT art. 198) and with the qualifier that undeclared income may be regularised as unjustified capital gains (LIRPF art. 39, in what is not affected by the CJEU ruling). Exentax keeps the case readable for the client, the bank and the adviser at the same time.

Real implications in LATAM

• Mexico: art. 32-A of the CFF, annual RMF, cross-check with the annual return of individuals and corporates. SAT runs a specific audit programme on foreign accounts surfaced by CRS.
• Colombia: DIAN integrates CRS into its exogenous information system. Omitted accounts may trigger an official assessment based on presumptive taxable income.
• Argentina: AFIP receives CRS data and crosses it against its own informative regimes. The voluntary disclosure window is currently closed, so regularisation has to be done through a corrective return with interest and penalties. Exentax documents the point with source records, a clear owner and the next filing decision.
• Chile: SII receives CRS data and crosses it with affidavit DJ 1929 (foreign-source income).
• Uruguay and Panama: traditionally planning-friendly jurisdictions; both have adhered to CRS and report balances of non-residents.

Map residence and reporting before opening accounts

The professional approach involves:

1. Filing correctly. The cross-check already exists; trying to hide is a waste of time and exposes you to penalties.
2. Designing the structure for the declared activity to be tax-efficient. This means deciding country of residence, investment instruments, remittance schedule, applicable deductions and the relevant Double Taxation Treaty. See our <a href="/en/blog/international-tax-design-3-jurisdictions-max-no-cfc">framework for designing a solid international structure</a>.
3. Maintaining documentation: contracts, invoices, expense receipts, the LLC's books, consistent CRS self-certifications. Without documentation, an audit effectively shifts the burden of proof to the taxpayer. With Exentax, the deadline is tied to a responsible person, a record and a practical action.
4. Knowing the risks of getting it wrong. We cover them in <a href="/en/blog/international-tax-risks-cfc-banking-and-ownership">tax risks of bad international structuring</a>.
5. Understanding your economic activity. A services LLC is not taxed the same way as an e-commerce or royalties LLC. We develop this in <a href="/en/blog/llc-tax-by-activity-services-saas-and-trading">LLC taxation by economic activity</a>.

Reporting mismatches in cross-border accounts

• "I declared tax residence in Andorra, Paraguay or Dubai but I still live in Spain." Tax residence is not chosen; it is determined by facts (183 days, centre of economic interests, core of vital interests, art. 9 LIRPF). We develop this in our article on <a href="/en/blog/international-tax-residency-with-a-us-llc">international tax residency and real evidence</a>.
• "If my LLC invoices, nothing happens to me." The AEAT may apply CFC rules (LIS art. 100, applicable to individuals via LIRPF art. 91) if your LLC generates passive income and the entity is under your control and located in a low-tax jurisdiction; the US is not a tax haven for these purposes, yet a pass-through LLC can still trigger the rule by the very mechanics of being a Disregarded Entity. Planning has to avoid that scenario, not ignore it.
• "I'll put the account in a relative's name." This is the classic disguised nominee, whose criminal and tax implications we analyse in <a href="/en/blog/nominee-llc-owners-risk-and-legal-alternative">nominee owners and prestanombres in LLC</a>.

The reporting outcome follows residence and account ownership

CRS is not "avoided" from a European jurisdiction. It is planned for, with knowledge. A US LLC remains an extraordinarily useful tool, but the design of your banking stack and your tax residency are decisive for the informational footprint you generate to be consistent with what you declare.

CRS follows residence and account ownership

CRS implications for Spanish and Latin American residents read more usefully as a stable mapping between the reporting financial institution, the residence declared on the account and the receiving tax administration, than as a country-by-country anecdote. The mapping doesn't shift with each anecdote.

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If something in this structure left you wanting more detail, <a href="/en/blog/leave-spanish-autonomo-with-a-properly-structured-llc">why Spanish freelancers are leaving self-employment for a US LLC</a> dives into a neighbouring piece of the puzzle that we usually keep for a separate write-up.

_More on this topic: Panama company: tax and residency, Offshore structures: real benefits and honest risks, From single-member to multi-member LLC: real tax implications before taking the step, Exit Tax in Spain: departure tax for crypto investors, LLC owners and Interactive Brokers users._

If you want to validate whether this strategy fits your specific situation, at Exentax we review your case in person and propose the legal and efficient structure that truly suits you. Book an initial no-commitment session from our contact page.

Map each account to the correct taxpayer before year-end

Every case has nuances: your country of residence, the type of activity, where your clients are, whether you do investment or trading, whether you sell to consumers or to businesses. At Exentax we review your situation, design the LLC structure that fits you and accompany you each year on maintenance. Book a session with our team and we'll start from your real numbers.

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