According to Bloomberg’s international tax research division, BNA, frustration has mounted in Europe because the US has refused to adopt the OECD’s Common Reporting Standard (CRS).
At a hearing on 4 May by the parliament’s Panama Papers Investigative Committee, numerous parliamentarians called on the EU executive body to ensure reciprocity when it comes to Fatca.
Ludek Niedermayer, a representative from the Czech Republic, told EU taxation commissioner Pierre Moscovici that the commission “should propose a mandate to negotiate a reciprocal Fatca arrangement”.
Jeppe Kofod, co-rapporteur of the Panama Papers committee, told Bloomberg BNA that in “the fight against money laundering and tax evasion, international cooperation and exchange of information is where it starts and ends”.
“Inclusion of the US on the anticipated EU list of uncooperative jurisdictions would certainly constitute a strong political signal”
“Therefore, I support that the commission propose a mandate to call on the US to make Fatca reciprocal”.
European disadvantage
There is concern that European banks will be at a competitive disadvantage when the first CRS tax data exchanges take place in 2017.
“While banks in Europe have made significant investments to implement the CRS and Fatca, the same does not hold true for banks in the US,” Camille Seilles, a legal and tax adviser with the Luxembourg Bankers Association (ABBL), told Bloomberg BNA.
“This triggers a distortion in terms of regulatory costs and puts a strain on the achievement of a global level playing field regarding tax transparency.”
Eventual reciprocity?
Members of the European Parliament, as well as European bank officials, have pointed out that the intergovernmental agreements on Fatca signed by EU countries call for a reciprocal arrangement for data exchange in the long term.
“It is no secret that the EU wants reciprocity along with OECD CRS,” Moscovici told members of the European Parliament. “We have raised the issue, including during meetings I had in Washington last week. The US has a central role to play in the fight against tax avoidance.
“We will have to see how the new US administration moves.”
EU tax haven blacklist
The EU is compiling a tax haven blacklist, to be completed by the end of 2017, which takes into account CRS compliance.
There are currently 92 countries and jurisdictions being screened for inclusion, including the US.
“If the US doesn’t live up to the EU tax haven blacklist criteria, they should obviously be added to the list,” said Kofod, a Danish member of the Socialist and Democrat political group, the second largest in the European Parliament.
Seilles said the “inclusion of the US on the anticipated EU list of uncooperative jurisdictions would certainly constitute a strong political signal”.
“Whether this would effectively lead the US to grant a high level of reciprocity under Fatca or to implement the CRS remains to be seen, however.
“A consistent and coordinated approach on the part EU member states is a must on this question.”
