Source: European Commission
The Commission welcomes the USA's acceptance of an government-to-government approach to tackling tax evaders and implementing the US Foreign Account Tax Compliance Act (FATCA).
This more business-friendly arrangement for EU financial institutions is the result of intense discussions with the USA, following a letter sent by the Commission and EU Presidency to the US tax authorities in April 2011 (see IP/11/413).
Through a government-to-government approach to tax information exchange, the administrative burden, compliance costs and legal difficulties which EU financial institutions would otherwise face in applying the FATCA provisions should be greatly reduced. The financial industry estimates that the costs of ensuring compliance with FATCA as initially designed would have been significant, with some sources estimating the cost of the required adaptation as $100 million for each multinational bank.
Any Member State that wants to should now be able to adopt this government-to-government approach to information exchange through coordinated bilateral agreements with the USA.
This would benefit Member States' tax administrations by ensuring reciprocal information provision by the US, and could be the basis for broader cooperation between the EU and the US on information exchange at a later stage.
In this context, the Commission will continue work to ensure that EU and national data protection legislation is fully respected in the implementation of the FATCA provisions.
Overall, this cooperation with US regarding FATCA should help greatly in advancing the EU's efforts to promote the global application of automatic exchange of information for tax purposes. It could also contribute to promote a single approach at global level to reporting arrangements on financial institutions.