The US Treasury has announced that as part of the crack down on American tax evasion it intends to have signed agreements with five European Union (“EU”) countries by the end of June 2012. The agreements will implement the Foreign Account Tax Compliance Act (“FATCA”) and the spokesman also said that the Treasury hoped to announce agreements with more countries in the next few months.

The Treasury announced it was negotiating with France, Germany, Italy, Spain and the United Kingdom – to implement the anti-evasion Foreign Account Tax Compliance Act (“FATCA”).

The five EU countries have agreed to collect the information from their banks and send it to the United States so that the banks will not have to enter into separate data disclosure agreements with the tax-collecting Internal Revenue Service.

FACTA is coming into effect in 2013, and as drafted calls for banks and financial institutions worldwide to gather the information and directly disclose it to the IRS. Failure to do so would lock what is referred to as a Foreign Financial Institution (FFI) out of the US financial system.

The intention of the deal these five EU countries is to reduce the financial and practical burden FATCA imposes on FFIs. However some EU based lawyers are saying that this deal could run against existing EU data protection laws, which are generally far more stringent than those of the US, particularly because compliance appears to be based at organisational level and not at governmental or even EU-wide level.

We shall see how this works out but there is no doubt that whether FATCA is imposed at organisational or at governmental level there is going to be a huge headache for the IT and software guys who are going to have to collect the data – which they currently have no need to do – and pass it on to whomever.

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Category: US Taxation 

2 Responses to “US Intends to Sign FATCA Agreements with Five EU Countries This Month”

  1. Mabel says:

    Outstanding post on US Intends to Agree FACTA Agreements with Five EU Countries This Month | Link4Business!! It is without doubt one of the best blogs I’ve read n a long time.

  2. Gregorie says:

    I have read your posts but do not understand how the USA can make these demands. Have you background to this.

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