Five European governments to promote FATCA model as "the new international standard"

Update: April 10: see Why European FATCA is not a solution for Europe 
 
This just out from the UK Treasury, in a letter to EU Tax Commissioner Semeta signed by Chancellor George Osborne and his colleagues from France, Italy, Spain and Germany:

"Following the passage of the U.S. Foreign Account Tax Compliance Act we have all been in joint discussions with the US as to the most effective way of concluding intergovernmental agreements to provide for automatic information exchange . . . we will be looking to promote these agreements as the new international standard, including through the various international fora, with the ultimate aim of agreeing a multilateral framework."

This is very significant, (and note that we published this, just a couple of days ago.) But the devil is in the detail, and note Europe's caution on this, below.

Still, just a few months ago, the OECD's near-useless "on request" system of information exchange was being hawked around as the "accepted international standard." Automatic information exchange is the gold standard, and we're happy to see this now being promoted officially. And there's more:

France, Germany, Italy, Spain and the UK have today agreed to work on a pilot multilateral exchange facility between our countries using the model agreed with the US as the basis for this multilateral exchange. This pilot will not only help in catching and deterring tax evaders but it will also provide a template as to the wider multilateral agreement we hope to see in due course. We would invite other EU Member States to join in this pilot and we hope that Europe can take a lead in promoting a global system of automatic information exchange. 

Again, highly significant. We also like this:

We call on all EU Member States for being able to agree without delay on the amending proposal to the Savings Taxation Directive of 2003, which would then pave the way for extending its scope to relevant third countries.

That, too, is very significant. The current EU Savings Tax Directive, a somewhat localised form of automatic information exchange, is full of holes, but the Amending Proposal, now in the wings, is a far, far more sophisticated beast that would plug the biggest of those holes. FATCA and the EUSTD are two different things, and we're not clear how these two different initiatives would mesh with each other, but we are generally in favour of both. (For some useful global context on these different agreements, and more, see Prof. Itai Grinberg's paper last year.)

We should note, however, that an article in Europolitics yesterday casts a question mark or two over the potential for the meshing or co-existence of both initiatives:

"French Finance Minister Pierre Moscovici has proposed a "European FATCA," while his German counterpart, Wolfgang Schäuble, has announced the start of an international crusade against tax evasion. . . . The idea of a European FATCA does not seem to interest the Commission. "We've already done a great deal at European level and there are many proposals on the table" to reinforce the drive against tax evasion, said the spokeswoman for Semeta, on 8 April."

We would hate to see anything getting in the way of the amendments to the Savings Tax Directive, and hope (assuming there is sincerity behind the letter) that some happy medium can be found.

The recent widespread offshore leaks scandal has perhaps been a(n important) trigger for the release of this letter now, but ultimate cause of this outbreak of (proposed) transparency, we believe, is people power, in the context of the global financial and economic crisis.  We aren't counting our chickens, but we believe that a period of rapid change in the world of secrecy is nigh. The world has had enough.