Global Tax Alert | 12 April 2013

France, Germany, Italy, Spain, and UK agree to pilot for multilateral exchange of tax information

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On 9 April 2013, France, Germany, Italy, Spain, and the UK announced an agreement to develop and pilot a multilateral tax information exchange facility. Under the agreement, a wide range of financial information will be automatically exchanged between the five countries. The aim of the pilot is not only to help in catching and deterring tax evaders as well as provide a template for wider multilateral automatic tax information exchange.

This pilot will be based on the Model Intergovernmental Agreement to Improve International Tax Compliance and to Implement FATCA (the US Foreign Account Tax Compliance Act) developed between these countries and the US. 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 compliance purposes.

The Governments of France, Germany, Italy, Spain, and the UK, with the support of the European Commission, took part in joint discussions with the US Government to explore an intergovernmental approach to FATCA, supporting the overall aim to combat tax evasion, while reducing risks and burdens on financial institutions. The model intergovernmental agreement was developed and published in July 2012.

The respective five Governments believe that the model agreement (and the subsequent bilateral agreements such as that signed between the UK and the US in September 2012) will help ensure that international tax evasion is tackled in a way that minimizes costs for both businesses and governments.

A joint letter has been issued to the European Commission setting out the terms of the agreement. The letter also makes the point that the Governments concerned will be looking to promote this agreement as the new international standard, including through the various international fora, with the ultimate aim of agreeing on a multilateral framework.

The Governments have invited other European Union Member States to join in this pilot and also stated their wish to discuss how progress can be made within Europe on improving tax information exchange between all Member States. In their letter to the European Commission, the signatories state that they look forward to discussing this initiative as part of the work on the European Commission Action Plan for tackling tax fraud and evasion issued on 6 December 2012.

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP, French Tax Desk, New York
  • Frédéric Vallat
    +1 212 773 5889
    frederic.vallat@ey.com
Ernst & Young LLP, German Tax Desk, New York
  • Jorg Menger
    +1 212 773 5250
    jorg.menger@ey.com
  • Thomas Eckhardt
    +1 212 773 8265
    thomas.eckhardt@ey.com
Ernst & Young LLP, Italian Tax Desk, New York
  • Emiliano Zanotti
    +1 212 773 6516
    emiliano.zanotti@ey.com
Ernst & Young LLP, Spanish Tax Desk, New York
  • Inigo Alonso Salcedo
    +1 212 773 8692
    inigo.alonsosalcedo@ey.com
Ernst & Young LLP, UK Tax Desk, New York
  • Ian Beer
    +1 212 773 5185
    ian.beer@ey.com
  • Sarah Churton
    +1 212 773 5994
    sarah.churton@ey.com

EYG no. CM3352