EU Looks for a Symmetric Exchange of Information Under US FATCA
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Originally Posted On: https://cktaxllc.com/european-union-fatca/
The Foreign Account Tax Compliance Act (FATCA), enacted in 2010 by Congress, requires foreign financial institutions to provide information to the IRS about the accounts held by US taxpayers or by foreign entities in which US taxpayers hold a substantial ownership interest.
However, according to experts, this exchange has not been reciprocal since FATCA came into effect, so European countries do not receive similar information from US banks about European taxpayers.
After a visit to Capitol Hill a few weeks ago, Paul Tang, chair of the European Parliament’s tax subcommittee, said in an interview that Treasury officials are willing to take steps toward changing the asymmetric exchange of information.
For instance, in the General Explanations of the Administration’s Fiscal Year 2023 Revenue Proposals, the Department of the Treasury explains that the US has some intergovernmental agreements, and under many of them, the US provides some information on residents of foreign countries that hold accounts at a U.S. financial institution.
However, the Department of Treasury acknowledges that the “US provides less information on foreign accounts at a U.S. financial institution than it receives on U.S. accounts at a foreign financial institution”. Thus, to achieve equivalent levels of reciprocal information exchange, legislation is needed.
According to data from the Department of the Treasury, the US has FATCA Agreements and Understandings in Effect with 113 jurisdictions, 45 of them in Europe.