The 2012/02/20 at 10:44
On 8 February, the United States, Germany, Spain, Italy, the United Kingdom and France signed an unprecedented agreement to set up a multilateral system for the automatic exchange of tax information. In 2010, the United States adopted a system, commonly called the FATCA, to fight against international tax evasion through a wider collection of information than in the past. This law, to be enforced in stages from 2013 onwards, forces foreign financial institutions (FFI) to transmit to the US tax office, the IRS, information on accounts held by American taxpayers whether they be citizens of the United States or not: the name and address of the account holder, the account balance, the sum of withdrawals and deposits…
But this measure has raised a certain number of questions, chiefly related to the fact that the FFIs established in the five European countries may not have the means to conform to the FATCA law as they would thus contravene their national laws on data protection. In addition, this unilaterally conceived measure did not foresee information exchange in such a way as to also benefit the partners of the United States. Germany, Spain, Italy, the United Kingdom and France have thus committed to holding discussions with the US administration to study the possibility of adjusting the FATCA system by putting greater weight on the investigations carried out by banks, seeking alternative sanctions to those originally envisaged, and proceeding to a review of information transmission methods.
Published in Washington, D.C. on 8 February, the joint press release defines a “possible framework for intergovernmental approach” by which the five European countries would adopt legislation requiring FFIs in their jurisdiction to report to national authorities the information requested by the United States. This information would then be transmitted to the United States “on an automatic basis”; in exchange, the FFIs in these countries would not be obliged to inform the IRS directly. In the United States, taxpayers are legally obliged to declare to the IRS all their global income. For US citizens, this requirement also applies if they reside overseas. For a number of years, authorities in Washington, D.C. have been doubling up efforts for these obligations to be respected.
According to the text, the FFIs that agree to cooperate with the IRS would become tax collectors on behalf of the United States: they would be obliged to transfer to the US tax authorities 30% of all financial flows relating to the USA received from any other non-cooperative FFI. According to an official at the US Treasury, this new agreement extending the tax cooperation of the five signatory countries conforms with the laws of these countries on data protection. Following the agreement of the European countries, the intergovernmental system is scheduled to be enforced in 2014.