Get a demo Create free account →
Free tool · No account needed

CRS entity classification

Financial Institution, Active NFE or Passive NFE. It is the first question on every self-certification and the one most often answered wrongly — usually by an entity that assumes “we are not a bank” settles it. Work through the decision tree and see which branch you land on, and why.

CRS Section VIII · 4 FI types · 8 Active NFE routes · controlling persons · nothing stored

Classify one entity

Runs in your browser · nothing uploaded

Answer for a single legal entity. The order matters: the Financial Institution tests come first, and only an entity that is not an FI can be an NFE at all.

Step 1 — Is the entity a Financial Institution?

Section VIII A

Any one of the four categories makes the entity an FI, and the NFE questions then fall away.

Does it accept deposits in the ordinary course of a banking or similar business?Depository Institution.
Does it hold financial assets for the account of others as a substantial part of its business?Custodial Institution. The test is generally whether 20% or more of gross income arises from holding financial assets and related services.
Does it primarily conduct trading, portfolio management or investing of financial assets for or on behalf of customers?Investment Entity, first branch. Includes trading in money market instruments, foreign exchange, transferable securities and derivatives.
Is more than 50% of its gross income from investing in financial assets, and is it managed by another Financial Institution?Investment Entity, second branch. Both limbs are required. “Managed by” means the managing FI has discretionary authority over the assets.
Is it an insurance company issuing or obliged to make payments on cash value insurance or annuity contracts?Specified Insurance Company.
If it is an Investment Entity, is it located in a non-participating jurisdiction and managed by another Financial Institution?This reclassifies the entity as a Passive NFE for CRS purposes, even though it is an Investment Entity. It is the single most misunderstood rule in Section VIII.

Step 2 — If not an FI, is it an Active NFE?

Section VIII D.9

Any one route is sufficient. An NFE that meets none of them is a Passive NFE.

Is less than 50% of gross income passive and less than 50% of assets held for producing passive income?The income and asset test, on the preceding calendar year or other appropriate reporting period. Both limbs are required. Passive income includes dividends, interest, rents and royalties not derived in an active business, and gains on financial assets.
Is its stock regularly traded on an established securities market, or is it a related entity of such a company?
Is it a governmental entity, international organisation, central bank, or wholly owned by one or more of them?
Does substantially all its activity consist of holding stock in, or financing, subsidiaries in trades or businesses other than financial services?The holding company route. It is not available where the entity functions as an investment fund such as a private equity, venture capital or buyout vehicle.
Is it a start-up, in liquidation or reorganisation, or a treasury centre within a non-financial group?Covers the start-up route in the first 24 months, entities emerging from liquidation or bankruptcy reorganisation, and group financing or hedging entities that do not serve outside parties.
Is it a non-profit established exclusively for religious, charitable, scientific, artistic, cultural, athletic or educational purposes?
What this means: an indicative classification from your own answers. Several tests turn on judgement and on figures for a defined reporting period, and jurisdictions have implemented Section VIII with local variations. Classification decides what a financial institution must collect and report about the entity and, for a Passive NFE, about the individuals behind it. Confirm against your own jurisdiction’s implementing rules before relying on it. This is not tax advice.

Classification drives everything downstream. The CRS and FATCA modules take account and entity data in any shape, validate it, and produce jurisdiction-ready XML with TIN structure checks — with a free tier to start.

Create free account →
Why it matters

The classification decides who gets looked through

Three outcomes, three very different consequences.

Financial Institution

You report

The entity has its own reporting obligations. It identifies reportable accounts, applies due diligence and files with its own tax authority, rather than being reported on by someone else.

Active NFE

Reported at entity level

The account is reported if the entity itself is resident in a reportable jurisdiction. Nobody looks behind it, which is why the Active route is worth establishing where it genuinely applies.

Passive NFE

Reported, and looked through

The financial institution must identify the controlling persons and report any who are reportable. Ownership of 25% or more is the usual starting threshold, and it applies even where the entity itself is not in a reportable jurisdiction.

Rules reviewed 21 August 2026 · OECD Common Reporting Standard, Section VIII · implemented in the EU by DAC2

Scope

What this tool does

It walks the Section VIII decision tree in the right order and records why you landed where you did.

It doesApply the tree in sequence

  • Tests the four Financial Institution categories before any NFE question.
  • Handles the Investment Entity in a non-participating jurisdiction, which is reclassified as a Passive NFE.
  • Tests six Active NFE routes, any one of which is sufficient.
  • Treats the income and asset test as requiring both limbs.
  • Separates a clear classification from one resting on unresolved questions.
  • Sets out what follows from each outcome, including the look-through for Passive NFEs.

It does notCompute the tests

  • Calculate passive income or asset percentages from your accounts.
  • Determine whether an entity is “managed by” a Financial Institution with discretionary authority.
  • Tell you whether a jurisdiction is participating for the purposes of the rule.
  • Identify controlling persons, or apply local variations of the 25% threshold.
  • Cover the CRS amendments extending scope to certain e-money products and CBDCs.
  • Constitute tax advice or a completed self-certification.

Classified, and now filing?

Account data in any shape, validated against the jurisdiction’s schema, with TIN structure checks, corrections and nil returns handled.

See CRS / DAC2 reporting →

Nothing you enter here leaves your browser

Your answers are held in the page and discarded when you close or reload it. Nothing is sent to REGREP, written to a log, saved, or passed to any analytics tool.

Questions

About CRS classification

What are the four Financial Institution categories?

Depository Institution, Custodial Institution, Investment Entity and Specified Insurance Company. An entity meeting any one of them is a Financial Institution, and the Active and Passive NFE questions do not arise.

What makes an entity an Active NFE?

Any one of several routes. The most common is the income and asset test: less than 50% of gross income for the preceding reporting period is passive income and less than 50% of assets held during that period produce or are held to produce passive income. Others include listed companies and their related entities, governmental entities, holding companies of non-financial subsidiaries, start-ups within their first 24 months, entities in liquidation or reorganisation, group treasury centres, and certain non-profits.

What is a Passive NFE?

Any NFE that is not an Active NFE. In addition, an Investment Entity located in a non-participating jurisdiction and managed by another Financial Institution is treated as a Passive NFE, even though it would otherwise be an FI. That second limb catches a great many fund and holding structures.

Why does Passive NFE status matter so much?

Because it triggers a look-through. The financial institution must identify the entity’s controlling persons and report any who are reportable, so the account is reported by reference to the individuals behind it rather than only the entity. That obligation applies even where the entity itself is resident in a non-reportable jurisdiction.

Does the income and asset test need both limbs?

Yes. Both the gross income limb and the asset limb must be satisfied for the entity to be an Active NFE on that route. An entity passing one but not the other does not qualify under it, though it may still qualify under another route.

Do you store my answers?

No. Everything is held in the page and discarded when you close or reload it.

Classification is the first field on the form.

Create a free account and take account data through validation to jurisdiction-ready XML.

Create free account → Validate a TIN

No card required · free tier on core modules · nothing stored from this tool