Michael Noonan (Limerick City, Fine Gael)
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The Foreign Account Tax Compliant Act (FATCA), 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. It will come into effect from January 2013. In order to address the possible administrative burden which might arise for EU financial institutions as well as possible breaches of EU Data Protection legislation, the Governments of a number of Member States, with the support of the European Commission, took part in joint discussions with the US authorities to explore a practical way forward that supports the overall aim to combat tax evasion, while reducing the risks and burdens on EU financial institutions.

The approach focuses on the use of existing tax treaties for information exchange between tax authorities, rather than direct reporting by EU financial institutions to the US Internal Revenue Service. The US are preparing a model global agreement upon which reporting to the US by FATCA partner countries will be based. My Department and the Revenue Commissioners have been in contact with their counterparts in the US to explore the implementation of FATCA rules through the global approach being devised by the US. There are at this point no specific concerns for the State with regard to the US proposals. However, the burden on financial institutions will be reduced where countries enter into an agreement with the U.S., based on the global agreement. The global model agreement is expected to be available before the end of June this year.