EU/US Dialogue on the Foreign Account Tax Compliance Act
Posted on 15th April 2011 in Taxation
In a letter sent to the US tax authorities, the Hungarian Presidency of the Council of the European Union and the European Commission invited the US authorities to engage in a dialogue on how to best achieve the objectives of the US Foreign Account Tax compliance Act (FATCA).
In this regard it pursues goals similar to those of the EU Savings Tax Directive which provides for an exchange of information between tax authorities of EU Member States. However, FACTA could impose a significant compliance burden on EU financial institutions (including banks, investment funds and insurance companies).
In light of the information exchange tools that already exist between tax administrations, and given the ongoing discussions on extending the scope of the Savings Tax Directive, which is a priority for the Hungarian Presidency and the Commission, the Hungarian Presidency and the Commission invited the US authorities to consider exploiting possible synergies to achieve their common goals in a cost-effective and business-friendly way.
The EU Savings Directive, like FATCA, imposes obligations on financial intermediaries requiring paying agents to report information on interest income paid to individual investors to tax authorities.
A revision of that Directive, in order to expand its scope, is at an advance stage. EU tax authorities also exchange information with each other under the EU Directive on Administrative Cooperation and with third countries, including the US, under information exchange clauses in bilateral double taxation treaties.
Source: europa.eu (http://europa NULL.eu/)