Mr. Chen, who works in international trade, made some money last year through his Hong Kong and U.S. stock accounts. Recently, he heard that mainland tax authorities have started using CRS data to track down taxes on overseas income, and he’s been feeling anxious: Where am I actually a tax resident? Will information from my Hong Kong accounts be shared with the mainland?

What puzzled him even more was that he had recently spent tens of thousands of yuan to obtain Hong Kong residency, and a friend had told him, ’Once you change your residency status, the CRS won’t report your information to the mainland anymore”—but is that actually true? With the launch of Hong Kong’s CRS 2.0 legislation in 2026, the rules have completely changed.

This article thoroughly explains the concept of “tax residency”—the most fundamental and yet most easily misunderstood concept—and, in the process, clarifies exactly what changes CRS 2.0 has brought.

01

What is CRS, and what is exchanged?

CRS stands for the Common Reporting Standard, a global standard for the automatic exchange of tax-related information on financial accounts introduced by the OECD in 2014. Simply put: Information about your financial accounts in Country B will be automatically reported annually by financial institutions in Country B to the tax authorities in Country A.

As of 2026, more than 120 countries and regions have participated in the program, and Mainland China and Hong Kong have been regularly exchanging information since September 2018. Hong Kong is where the financial assets of Mainland residents held overseas are most concentrated, and information is exchanged almost every year.

Note: The CRS exchanges information on “non-resident financial accounts,” and the determining factor is tax residency—not nationality, not passport status, and not which house you live in. This is the root cause of all the misconceptions discussed below.

02

How Is Tax Residency Determined?

Tax residency is determined by ’which jurisdiction you have the closest connection to,” and is typically assessed according to each country’s domestic laws, with the key factors being domicile, residence, length of stay, center of vital interests, and family ties. For residents of mainland China, simply put: if you have a Chinese household registration (hukou), a family, and the center of your life in mainland China, you are generally considered a mainland tax resident.

In Hong Kong, tax residency is determined based on whether an individual “ordinarily resides in Hong Kong,” stays in Hong Kong for more than 180 days in a single tax year, or stays for a total of more than 300 days over two tax years, and has the center of their life in Hong Kong. Many people mistakenly believe that simply holding a Hong Kong non-permanent resident identity card automatically makes them non-tax residents of the mainland—this is the most common misconception.

What should you do if you have dual tax residency (i.e., you are recognized as a tax resident in two jurisdictions simultaneously)? Under the original CRS rules, you could determine your sole tax residency step by step using the “higher-ranking rule” in tax treaties; however, CRS 2.0 has closed this loophole that allowed for “choosing one jurisdiction to report to.”

If you’re facing a similar situation—unsure whether you’re a mainland or Hong Kong tax resident, or concerned that your Hong Kong account information might be shared with the mainland—feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671), and we’ll help you determine your tax residency status. Feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671), and we’ll help you sort out this entire process from start to finish.

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03

What Are the Three Changes in CRS 2.0?

First, the inclusion of crypto assets in reporting. Hong Kong’s “Taxation (Amendment) (Crypto-Asset Reporting Framework and Revised Common Reporting Standard) Bill,” which was gazetted on March 27, 2026, brings digital assets such as Bitcoin, stablecoins, and NFTs under the Common Reporting Standard (CRS) and introduces the Crypto-Asset Reporting Framework (CARF). The exchange of crypto-asset information is scheduled to begin in 2028.

Second, ’full exchange’ of information on dual tax residency. CRS 2.0 requires account holders to truthfully declare all jurisdictions in which they are tax residents, and financial institutions must report this information simultaneously to all relevant jurisdictions; it is no longer permissible to “report only to Hong Kong but not to the mainland.” The strategy of using Hong Kong residency to circumvent mainland regulation has essentially become ineffective.

Third, look-through scrutiny. Shell companies and offshore trusts are required to be scrutinized to identify their ultimate beneficial owners (UBOs). “Tax havens” such as the British Virgin Islands (BVI) and the Cayman Islands have already taken the lead in implementing the new CRS 2.0 standards effective January 1, 2026. Offshore shell companies with no substantive operations—the so-called “three-no” entities—will be directly identified as tax avoidance vehicles and reported.

04

What information will be exchanged?

The following information will be exchanged: bank deposit balances and interest; securities such as stocks, mutual funds, and bonds; insurance products with cash value and dividends; cryptocurrency accounts (starting in 2028); information on the beneficial owners of trusts and offshore companies; account holders’ TINs; and total transaction amounts.

The following will not be directly exchanged: non-financial assets such as overseas real estate, jewelry, and works of art, as well as assets held in jurisdictions not covered by the CRS (though with over 120 participating countries, the scope for such assets is extremely limited). In other words, it is financial accounts—not the houses registered in your name—that truly cannot be “hidden.”

The question that worries many people the most is, ’Why is there so much money held overseas?’—The essence of CRS 2.0 is a shift from “monitoring accounts” to “identifying owners,” probing who owns the accounts, who benefits from them, and who exercises control over them. Asset transparency is an irreversible trend.

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05

What Should Ordinary People Do?

First, clarify your tax residency status. Don’t be misled by an agent who claims, “You’ll be tax-exempt once you change your status.” You can only be considered a Hong Kong tax resident if you actually live, work, and pay taxes in Hong Kong; if you merely obtain the status while your primary place of residence remains on the mainland, the CRS will still report you to the mainland authorities.

Step 2: Accurately report your overseas income. The 2025 individual income tax annual settlement was processed from March to June 2026. Income from Hong Kong and U.S. stocks must be included in your comprehensive income as required by law; if you have proof of tax payment overseas, you may claim a tax credit within the prescribed limit. Don’t wait until you receive a tax payment notice.

Step 3: Re-evaluate your offshore structure. Quickly inject commercial substance (staff, office space, and decision-making processes) into shell companies, and route crypto assets through compliant platforms to maintain proper records. Rather than gambling on a lack of transparency, it’s better to get your books in order now.

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