Offshore Secrets: Time is ripe for a European FATCA

From the Green Party and European Free Alliance in the European parliament:

Offshore Secrets: Time is ripe for a European FATCA

Journalists from over 30 countries have published data of approximately 130,000 persons involved in tax haven companies or activities aiming at tax evasions or avoidance (1). This gave a new boost to the debate on tax justice and untransparent international financial transactions, which had last been triggered by the FATCA initiative in the US.(2) FATCA forces practically every finance institution active in the US or offering US bonds to reveal information of US taxpayers to the American Internal Revenue Service. This applies also to activities outside of the US pursued e.g. by subsidiary or parent companies of American banks. Furthermore, to ensure that transmitted information is complete and exhausted, FACTA requires financial institutions to determine ownership structures of companies and trusts. This way, no income or asset of an American taxpayer remains opaque.

Green finance spokesperson Sven Giegold welcomes the revelation and requests appropriate consequences:

“Automatic exchange of information is the only measure to effectively put a stop on tax evasion in the international financial market. Journalists have introduced unique transparency to these dark spots. It is now up governments to put their rhetorics into practice.

Despite many promises, states have so far not been able to jointly solve the problem. Hardly any government has seriously taken up the fight against tax evasions. Tax justice and equal rights And responsibilities for all fall by the wayside, even though they are essential elements of social market economies and democracy.

Income from capital has to be equally considered for tax as income from labor. FATCA is the right instrument to call off avoidance strategies and criminal activities. The fine of 30% for all payments from the US to non-cooperative institutions FATCA imposes, will lead to the automatic transmission of relevant data.

All European governments are now under obligation to act. The UK and Germany pursued the wrong path, trying to introduce agreements based on anonymity with Switzerland. European ministers of finance have stabbed the US in the back and lost valuable time in the global fight for tax justice. For a financial system which meets national taxation requirements we need a European FATCA now. Germany and France should take the initiative of a coalition of the willing. Of course, there is no sense in waiting for countries which have blocked progress towards tax transparency in the EU such as Luxembourg and Austria. Additionally, the Greens drafted a European tax package for tax justice in Europe.(3)”

(1) More detailed information on the leaked date is for example given here 

(2) FATCA: Foreign Account Tax Compliance Act

(3) The tax package can be accessed here.

More on this crucial issue here.