Active and Passive NFEs under CRS

Why the class matters

A Passive NFE is reported on the ordinary fields, but the institution must then identify its controlling persons and report separately any who are resident in a reportable jurisdiction; Active NFEs carry no look-through. The class is the first gate on whether an intermediate is seen through — operating entities in a group are usually Active; pure holding platforms usually Passive.

The tests

The measure is generally the financial information for the prior reporting period (see table): passive income (interest, dividends, rents, royalties, capital gains) below 50% of gross income, and assets producing passive income below 50% of total assets, makes the entity Active. Either ratio at or above 50%, or pure holding status, generally means Passive. Members of listed non-financial groups and similar categories are specified Active NFEs.

Controlling persons

A controlling person is a natural person exercising control over the entity, in practice generally tested through direct or indirect ownership above 25%, control rights, or senior management. Trusts follow special rules: trustees, settlors, beneficiaries (including discretionary beneficiaries) and protectors are all controlling persons — a trust is not taken outside reporting by its form.

Active / Passive NFE tests

Self-certification

Onboarding a new entity account and later reviews require the holder’s self-certification — tax residence, entity class, controlling-person details — refreshed on change or when found unreliable. The self-certification should match the registers, incorporation documents and accounts; a mismatch invites explanation or enhanced review.

TINs

Mainland individuals use the resident identity card number; Mainland entities the unified social credit code; Hong Kong individuals use the HKID number as the functional equivalent. Errors or omissions delay exchange or amount to an incorrect declaration.