From MEP Sophia In’t Veld
The United States Foreign Account Tax Compliance Act (FATCA) requires that foreign financial institutions register with the US Internal Revenue Service (IRS) and promise to identify, collect and report information on US clients’ offshore bank accounts. According to Financial News, entities must register by 25 October 2013 in order to be included on the IRS’s list of compliant institutions to be released in December 2013(1). In order to facilitate this process and ease the burden on financial entities, a number of countries have embarked on negotiations on so-called intergovernmental agreements (IGAs) with the United States on how to implement FATCA rules.
1. Can the Commission clarify which Member States have to date concluded IGAs on FATCA?
2. Can the Commission clarify on what legal basis it is ‘coordinating’ the bilateral agreements and conducting talks with the United States? What mandate does the Commission have to engage in talks with the United States?
3. Can the Commission clarify whether these IGAs can be modified or suspended unilaterally by the United States?
4. Can the Commission clarify whether, in its view, the reciprocity clause does indeed mean complete symmetry?
5. Can the Commission clarify the situation for foreign financial institutions from Member States that have not concluded an IGA? Would the foreign financial institutions in these countries be at risk of violating European law, notably data protection law?
6. Can the Commission clarify whether the European Data Protection Supervisor and the article 29 Data Protection Working Party (WP29) have been consulted on the model agreements, and whether they approve?
7. Can the Commission explain how FATCA and the IGAs relate to the new EU proposals for fighting tax avoidance and tax evasion?
8. Can the Commission clarify whether, once the Savings Tax Directive is in force, the United States could theoretically gain access to data from all the Member States through a handful of bilateral agreements?
9. Can the Commission clarify whether it has conducted an assessment of the financial, administrative and economic impact of the FATCA on European businesses, and whether European businesses are potentially at a competitive disadvantage compared to their US counterparts?
and the response from the EU Commission
. So far, the United Kingdom, Denmark, and Ireland have signed FATCA Model 1(1) intergovernmental agreements (IGAs) with the US, while Germany, Spain and Italy have initialled such IGAs. .
2. The US is negotiating with each Member State on a bilateral basis; the Commission is not involved in these negotiations nor is it coordinating them. .
3. A FATCA IGA may be amended by written mutual consent of the Parties; either Party may terminate the IGA by giving notice of termination in writing to the other Party. .
4. The reciprocity clause included in the Model 1 IGA commits the US to achieving ‘equivalent’ levels of reciprocal automatic information exchange with FATCA partners. .
5. See response to Question E-2760/12. .
6. The Commission consulted the article 29 Data Protection Working Party (WP29) on FATCA and the Model IGAs. The opinions provided by the WP29 can be found on the Europa website(2). .
7. FATCA and the IGAs, as US initiatives, are not part of the recent Commission Action Plan(3) to strengthen the fight against tax fraud and tax evasion. However, the Model 1 IGAs are in line with one of the proposed actions i.e. promoting the automatic exchange of information as the future EU and international standard of transparency in tax matters. .
8. No, that will not be the case. .
9. The Commission has not conducted such an assessment but several EU businesses have done so(4). FATCA IGAs will also affect US businesses which will be required to act as withholding agents and also to report certain information about EU residents.