Under the Automatic Exchange of Financial Account Information (AEOI), financial institutions identify the tax residence of their account holders and, for some entities, the individuals who control them. Each year they report to the Inland Revenue Department, which exchanges the information with the tax authorities where those people are resident. Hong Kong has exchanged information every year since 2018.
AEOI does not create a new tax and account holders cannot opt out. For individuals it mostly means completing a self-certification accurately. For companies and trusts the key question is classification: it decides whether the entity reports, or whether its owners are reported.
At a glance
- Legislation
- Part 8A and Schedules 17C to 17E, Inland Revenue Ordinance (Cap. 112)
- Reportable jurisdictions
- 129 (from 1 January 2025)
- Change in circumstances
- Updated self-certification generally within 30 days
- False self-certification
- Offence; fine at level 3 (HK$10,000)
- Changes from 1 January 2027
- All reporting financial institutions must register; six-year records; administrative penalties
What AEOI is and why it exists
The G20 endorsed automatic exchange as the global standard in 2013 and 2014, and the OECD developed the Common Reporting Standard (CRS). More than 100 jurisdictions apply it, with peer reviews by the Global Forum. Information is exchanged only between tax authorities under confidentiality safeguards; it is not a public register.
| Who | How AEOI affects them |
|---|---|
| Individual account holders | Provide a self-certification of tax residence and TIN; accounts are reported if they are resident in a reportable jurisdiction |
| Entities that hold accounts | Provide a self-certification including their CRS classification |
| Controlling persons | Individuals behind passive entities; their details may be reported |
| Financial institutions | Due diligence, registration, annual returns, records and a compliance programme |
Self-certification
Hong Kong financial institutions must obtain a self-certification for every new account, whatever the holder's residence. The institution checks it against its other records, including its AML documents; a Hong Kong residence declaration with a foreign address and telephone number will be queried.
| Form | Typical content |
|---|---|
| Individual | Name, residential address, date and place of birth, every jurisdiction of tax residence and the TIN for each (or why none is available) |
| Entity | Name, address, place of incorporation, tax residence and TIN, CRS classification, controlling persons where required |
| Controlling person | Personal details as above, the entity concerned and the type of control |
Tax residence and TINs
- Each jurisdiction sets its own residence rules (days present, permanent home, centre of interests, citizenship for the United States, place of management for companies). A person can be resident in more than one, and all must be declared.
- For CRS purposes an individual is generally regarded as Hong Kong resident if ordinarily resident here, or present for more than 180 days in a year of assessment, or more than 300 days over two consecutive years. A company is generally resident if incorporated in Hong Kong or normally managed or controlled here.
- The Hong Kong TIN is normally the HKID number for individuals and the Business Registration number for entities.
- Residence or citizenship obtained through investment schemes attracts additional scrutiny.
What is reported and exchanged
Reports include name, address, residence, TIN, date and place of birth, account number, the year-end balance or value, and income: interest, dividends, other income and gross sale or redemption proceeds, depending on the account type. For a passive entity, each reportable controlling person is reported as well. The exchange is reciprocal: the IRD also receives information about accounts that Hong Kong residents hold abroad.
If you do not provide a valid self-certification, the institution may decline the account, restrict services or report on the indicators it already holds. Not responding does not prevent reporting.
Classifying companies and trusts
- Is it a financial institution? A custodial institution, depository institution, investment entity or specified insurance company. An entity earning mainly investment income and managed by another financial institution is usually an investment entity.
- If so, is it reporting? Hong Kong financial institutions report unless listed as non-reporting in Schedule 17C.
- If not, it is a non-financial entity (NFE). Check the active categories.
- If not active, it is a passive NFE and its controlling persons must be identified.
- Record the analysis and review it annually and whenever the business changes.
| Entity | Typical classification (depends on the facts) |
|---|---|
| Trading or service company | Active NFE, if under 50% of income and assets are passive |
| Investment holding company managing its own portfolio | Often a passive NFE |
| Investment company with a licensed discretionary manager | Often an investment entity (financial institution) |
| Holding company of operating subsidiaries | May be an active NFE |
| Start-up in its first 24 months | May be an active NFE if conditions are met |
| Qualifying charity or non-profit | May be an active NFE |
| Trust with a professional trustee or discretionary manager | Usually an investment entity and reporting financial institution |
| Trust with individual trustees and no professional management | Usually a passive NFE |
Passive income includes dividends, interest, rents and royalties not earned in an active business, and gains on financial assets. "Actively trading" shares does not make a company an active NFE.
Controlling persons
- Companies and partnerships: individuals owning or controlling, directly or indirectly, 25% or more, or exercising control by other means; failing that, the senior managing official. Ownership through intermediate companies is traced to the top.
- Trusts: the settlor, trustees, protector, enforcer, beneficiaries or classes of beneficiaries, and anyone else with ultimate effective control, whether or not they exercise it in practice.
- Keep the company's Significant Controllers Register, the bank's beneficial ownership records and the self-certifications consistent. Inconsistency is a common source of queries.
Obligations of reporting financial institutions
| Obligation | Position |
|---|---|
| Due diligence | Self-certification on every new account; reviews of pre-existing accounts (high value individual accounts above HK$7.8 million; entity accounts up to HK$1.95 million may be left unreviewed unless the institution elects otherwise) |
| Registration with the IRD | From 1 January 2027 every reporting financial institution must register, whether or not it has reportable accounts. Existing unregistered institutions by 31 March 2027; new ones by 31 January of the following year |
| Annual return | Financial Account Information Return (BIR80), due on the date in the IRD's notice, normally early June |
| Records | Six years after the return due date, continuing after the institution ceases or is dissolved |
| Compliance programme | Written policies, a responsible person, account opening controls, change monitoring, data checks, training and periodic review; the IRD conducts desk, on-site and thematic reviews |
| Penalties | Offences for institutions, officers and service providers; administrative penalties from 2027, including amounts calculated per account |
A family investment company or trust whose portfolio is managed by a licensed manager can be a reporting financial institution without realising it. This is worth checking now, before the 2027 registration deadline.
FATCA and the CRS
| FATCA | CRS | |
|---|---|---|
| Basis | US citizenship and US tax residence | Tax residence in reportable jurisdictions |
| Reporting route for Hong Kong institutions | Directly to the IRS (Model 2 agreement signed 13 November 2014) | To the IRD, which exchanges with partners |
| Forms | W-9 and W-8 series | CRS self-certification |
The United States has not adopted the CRS and is not a Hong Kong reportable jurisdiction. A US person resident elsewhere may be reported under both regimes.
Changes ahead
| Measure | Proposed timing |
|---|---|
| 2026 amendments (registration, records, penalties) | From 1 January 2027 (enacted) |
| Crypto-Asset Reporting Framework (CARF) | From 1 January 2027, first exchanges in 2028 |
| Amended CRS (e-money, central bank digital currencies, new data fields) | From 1 January 2028, first exchanges in 2029 |
- Written CRS classification of companies, trusts and holding structures.
- Preparing and reviewing entity and controlling person self-certifications.
- Mapping ownership to controlling persons and reconciling it with the Significant Controllers Register.
- Supporting entities that are reporting financial institutions with registration, due diligence, returns and records, with specialist partners where needed.
- CRS policies, procedures and training.
We do not give tax advice on the law of other jurisdictions; where that is needed we work with the appropriate adviser.
In summary
- AEOI is a transparency mechanism, not a tax.
- Self-certifications must be complete, accurate and updated within about 30 days of a change.
- Classification decides whether an entity reports or is looked through.
- From 2027, every reporting financial institution must register with the IRD.
Official references
- Inland Revenue Ordinance (Cap. 112), Part 8A and Schedules 17C, 17D and 17E
- Inland Revenue (Amendment) (Automatic Exchange of Information) Ordinance 2026
- Inland Revenue Department: AEOI guidance and frequently asked questions, www.ird.gov.hk
- OECD: Standard for Automatic Exchange of Financial Account Information; residence and TIN information, www.oecd.org