U.S., 5 European Nations Reach Deal to Combat International Tax Evasion

U.S., 5 European Nations Reach Deal to Combat International Tax Evasion

In a joint statement, the governments of the United States, France, Germany, Italy, Spain and Britain stated they wished to increase cooperation in fighting international tax evasion. This would work in both directions-the European nations providing information about US resident accounts on their soil, and the US doing likewise regarding US accounts of citizens of those 5 nations.

The statement reads in part:

2. On 18 March 2010 the United States enacted provisions commonly referred to as the Foreign Account Tax Compliance Act (FATCA), which introduce reporting requirements for foreign financial institutions (FFIs) with respect to certain accounts. France, Germany, Italy, Spain and the United Kingdom are supportive of the underlying goals of FATCA.  FATCA, however, has raised a number of issues, including that FFIs established in these countries may not be able to comply with the reporting, withholding and account closure requirements because of legal restrictions.

3. An intergovernmental approach to FATCA implementation would address these legal impediments to compliance, simplify practical implementation, and reduce FFI costs.

4. Because the policy objective of FATCA is to achieve reporting, not to collect withholding tax, the United States is open to adopting an intergovernmental approach to implement FATCA and improve international tax compliance.

5. In this regard the United States is willing to reciprocate in collecting and exchanging on an automatic basis information on accounts held in US financial institutions by residents of France, Germany, Italy, Spain and the United Kingdom. The approach under discussion, therefore, would enhance compliance and facilitate enforcement to the benefit of all parties.

View the full statement at: http://www.hm-treasury.gov.uk/joint_intl_statement_fatca.htm.

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