The US has eased onerous reporting requirements on overseas financial institutions that it had sought to impose as part of a global crackdown on tax evasion.
The Treasury announced yesterday that it had struck agreements with the governments of the UK, France, Germany, Italy and Spain to allow their banks to submit information on US account holders through their own governments rather than directly to US tax authorities.
The Foreign Account Tax Compliance Act, a US law passed in 2010 that targets tax dodgers using foreign accounts, had originally required overseas financial institutions to provide information directly to the Internal Revenue Service, potentially in breach of their home countries’ privacy laws. Those that did not comply faced, among other penalties, a 30 per cent withholding tax on payments received from the US.