We’ve said a lot about Swiss accounts in this blog in connection with the new U.S. emphasis on offshore account reporting compliance. Most recently, one week ago, we noted how the IRS is going after still more Swiss account information through the aggressive use of John Doe summonses.
Our coverage of issues relating to Swiss accounts is only natural, considering the premiere place that these accounts have played in offshore tax issues.
But offshore issues arise in many other countries as well. In this post, let’s look at one of Switzerland’s neighbors, namely France.
Last week, the U.S. Treasury Department announced that it had concluded an intergovernmental agreement (IGA) with France to put into effect the Foreign Account Tax Compliance Act (FATCA).
FATCA is a sweeping new law passed by Congress in 2010. It seeks to enlist foreign financial institutions and governments in a combined campaign to crack down on tax evasion through offshore accounts.
As we have discussed in prior posts, however, Congress does not have the power to force foreign governments to agree to participate in exChanging information about taxpayers. In order for FATCA to go into full effect between the U.S. and a given country, an IGA must be concluded between the U.S. and that country.
Under the IGA between France and the U.S. signed earlier this month, French financial institutions will be required to disclose information about U.S. taxpayers to the French government. The French government will then pass that information along to the IRS.
The agreement with France brings to 10 the number of IGAs that the U.S. Treasury has reached to implement FATCA. Considering that there are nearly 200 countries in the world, it is fair to say that even with the signing of an IGA with France, the would-be global reach of FATCA remains a work very much in progress.
Source: Department of the Treasury, “U.S. And France Agree To Combat Offshore Tax Evasion,” Nov. 14, 2013