In a letter sent to the US tax authorities this morning, the Hungarian Presidency of the Council of the European Union and the European Commission invited the US authorities to engage in a dialogue on how to best achieve the objectives of the US Foreign Account Tax compliance Act (FATCA). FATCA is a US legislation intended to ensure that US tax authorities obtain information on investments by US residents in foreign financial institutions, including European financial institutions.
In this regard it pursues goals similar to those of the EU Savings Tax Directive which provides for an exchange of information between tax authorities of EU Member States. However, FACTA could impose a significant compliance burden on EU financial institutions (including banks, investment funds and insurance companies). In light of the information exchange tools that already exist between tax administrations, and given the ongoing discussions on extending the scope of the Savings Tax Directive, which is a priority for the Hungarian Presidency and the Commission, the Hungarian Presidency and the Commission invited the US authorities to consider exploiting possible synergies to achieve their common goals in a cost-effective and business-friendly way.