The Hungarian Presidency of the Council of the European Union and the European Commission have formally invited the US authorities to discuss how US Foreign Account Tax compliance Act (FATCA) can be implemented in the EU. FATCA is similar to the EU's Savings Tax Directive whereby US tax authorities obtain information on investments by US residents in foreign financial institutions, including European financial institutions. The Commission is concerned that FACTA could impose a significant compliance burden on EU financial institutions and have invited the US to use information exchange tools already in place.

Under FATCA, foreign financial institutions with US customers and foreign non-financial entities with substantial US owners must disclose information regarding US taxpayers directly to the Internal Revenue Service. Failure to disclose information will result in a requirement on non-US financial intermediaries to withhold a 30% tax on US-source income. The European financial industry estimates that the costs of modifying their IT systems and the administrative burden of ensuring compliance with FATCA would be significant.

Full details are available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/413&format=HTML&aged=0&language=en&guiLanguage=en