FATCA Agreement with France
by Linda Beale
FATCA Agreement with France
On November 14, the US Treasury Department announced that it had signed an agreement with France relating to the implementation of the 2010 Foreign Account Tax Compliance Act (FATCA) law. That makes the 10th such agreement signed between the US and other countries to date, and helps move the law towards smoother implementation.
The purpose of FATCA is to cut tax avoidance by increasing transparency–especially in the case of offshore bank accounts that have, in the past, served as key mechanisms for avoiding taxation.
It requires U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) who do not agree to identify and report information on U.S. account holders. FFIs have the option of entering into agreements directly with the IRS, or through one of two alternative Model IGAs signed by their home country. The IGA between the United States and France is the Model 1A version, meaning that FFIs in France will be required to report tax information about U.S. account holders directly to the French government, which will in turn relay that information to the IRS. The IRS will reciprocate with similar information about French account holders. Id.
Treasury officials praised the French government for its support in the effort to implement FATCA.
“France has been an enthusiastic supporter of our effort to promote global tax transparency and critical to drafting a model of FATCA implementation,” said Deputy Assistant Secretary for International Tax Affairs Robert B. Stack. “This agreement demonstrates the growing global momentum behind FATCA and strong support from the world’s most important economies.” Id.