This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Government has today issued a joint statement with the Governments of France, Germany, Italy, Spain and the United States, setting out an agreed approach to the US “FATCA” legislation, which aims to combat cross-border tax evasion.
This focuses on an intergovernmental approach to information exchange, which addresses certain legal difficulties and compliance burdens that would otherwise arise for financial institutions affected by FATCA.
Welcoming the joint statement, David Gauke, Exchequer Secretary to the Treasury, said:
The Government is committed to tackling tax evasion, wherever it takes place. This joint statement builds on the close cooperation of all the countries involved, and of the European Commission, in tackling cross-border tax evasion and provides a practical way forward that should reduce the burdens on the financial sector.
FATCA - the Foreign Account Tax Compliant Act, which is part of the US Hiring Incentives to Restore Employment Act of 2010, aims to combat tax evasion by US tax residents using foreign accounts. It includes certain provisions on withholding taxes and on the reporting of information by foreign financial institutions for US tax compliance purposes. These give rise to certain legal difficulties and administrative burdens for financial institutions.
In order to address these issues, the Governments of France, Germany, Italy, Spain and the United Kingdom, with the support of the European Commission and the personal involvement of Commissioner Algirdas Semeta, have taken part in joint discussions with the United States Government to explore a practical way forward that supports the overall aim to combat tax evasion, while reducing the risks and burdens on financial institutions.
This approach focuses on the use of existing tax treaties for information exchange between tax authorities, rather than direct reporting by financial institutions to the US Internal Revenue Service.