US Compliance Act Will Hinder EU Banks

April 7, 2011 International Tax CooperationTaxation in EUTaxation in USA

Secretary Timothy F. Geithner,  John PodestaA letter has been sent on behalf of the European Commission to the US government in order to initiate talks regarding new US international tax compliance and reporting rules.

The chair of the EU Economic and Financial Affairs Council György Matolcsy and EU Commissioner of Taxation Algirdas Šemeta have issued a joint letter to the U.S. Treasury Secretary Timothy Geithner and Internal Revenue Service Commissioner Douglas Shulmam, urging the US to enter into discussions about the impact of the country’s Foreign Account Tax Compliance Act (FATCA) and its impact on European financial institutions.

The FATCA is scheduled to come into effect in 2013, and calls for EU institutions to disclose information regarding their US customers with deposits exceeding the amount of USD 50 000. EU financial institutions have already expressed concern regarding the potential compliance cost and potential penalties associated the FATCA.

The letter suggested that the system be changed, in order to work synergistically with the already instated EU Savings Tax Directive.

Photo by Center for American Progress