Brussels, 22/06/2011 (Agence Europe) - In Brussels this Thursday 23 June, discussions will open between the European Union and the American tax authorities on the application of the American law on fiscal obligations for overseas accounts (FATCA), certain elements of which the Commission wishes to make more flexible due to their impact on the financial sector of the EU.
This new law, which is due to enter into force in 2013, pursues similar objectives to those of the EU directive on tax on savings income (2003/48/EC) which is currently being revised to allow the tax authorities of the United States (IRS) to obtain information on investments made directly or through companies by American taxpayers with financial (and also non-financial) establishments abroad. It requires these establishments to notify the IRS of a series of data, including the names of the American clients, with the threat of a 30% tax on their American revenue, or no longer being allowed to operate on American soil, for failure to comply.
Due to its requirements and its extra-territorial scope, the FATCA would bring about a heavy burden for the financial establishments of the EU (banks, insurance companies, etc), particularly in terms of the costs of adapting their IT systems, data research and the penalties incurred. It would prove a disincentive for these companies to deal with American clients, the sector fears. It also runs counter to the laws of certain member states on data protection.
On 6 April of this year (see EUROPE 10354), the Hungarian Presidency and the European Commission called for exemptions for European institutions operating on behalf of American clients presenting very low risks of tax evasion. They called for dialogue with the American authorities with a view to defining synergies to allow both sides to achieve their joint objectives in the fight against tax evasion, at the lowest possible cost and without penalising the financial operators. Commissioner Šemeta (taxation) has suggested a tax convention based on the IRS directives to the American financial institutions on the exchange of information on the savings of non-residents and the requirements in this matter of the revised European directive on tax on savings.
Switzerland, which is carrying out bilateral negotiations with the EU on tax on the savings of non-residents (see EUROPE 10401), but also with the United States on the application of the FATCA, may join in this EU-USA dialogue. (F.G./transl.fl)