Brussels, 07/04/2011 (Agence Europe) - In a letter sent on Wednesday 6 April to the US tax authorities this morning, 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), while seeking to avoid the costs of compliance and penalties that EU financial institutions, including banks, investment funds and insurance companies, might incur.
FATCA pursues the similar objectives as EU Directive 2003/48/EC on savings income, which is currently under revision, in that it is intended to ensure that US tax authorities obtain information on the income US residents obtain from investment in foreign financial institutions. For this purpose, it requires these institutions, and non-financial bodies with substantial U.S. owners, to disclose information regarding U.S. taxpayers directly to the IRS (Internal Revenue Service). Failure to disclose information results in a requirement on non-U.S. financial intermediaries to withhold a 30% tax on U.S.-source income. (F.G./transl.rt)