UK Signed Tax Agreement with European Countries Spain, France, Italy, and Germany

Online, April 10, 2013 (Newswire.com) - George Osborne, Chancellor of the Exchequer and Second Lord of the Treasury, has signed a tax deal with the finance leaders of Spain, Germany, France, and Italy. Under the said agreement, banks in the G5 will be required to reveal financial information on their foreign clients. These details will then be forwarded to the tax domicile and will be checked for tax evasion.

This new agreement, described by many as a "pilot" scheme, is based on the United State's Foreign Account Tax Compliance Act (FATCA) which has been used to identify and arrest American tax evaders abroad since 2010.

The finance ministers of the five European countries wrote a letter to EU tax commissioner Algirdas Semeta, letting him know about the deal. They said, "The pilot will not only help in catching and deterring tax evaders but will also provide a template as to the wider multilateral agreement we hope to see in due course." The ministers also invited other EU Member States to join them in the agreement, which they hope will finally remove the hiding places for those who seek to evade paying their taxes.

According to an estimate from the UK Treasury, tax evasion is costing HM Revenue & Customs approximately £4 billion a year in lost income. Prime Minister David Cameron has promised to prioritise solving the tax evasion issues in his G8 agenda. The information exchange deal, which may also be discussed during the meeting of EU finance, follows the same international agreements. In September 2012, the British government signed a contract to implement US FATCA rules. The Isle of Man, Jersey, and Guernsey have also recently signed automatic information exchange agreements with London.

"This is an important further step in the fight against tax evasion and represents the next stage in promoting a new standard in the automatic exchange of tax information," said David Gauke, Exchequer Secretary to the Treasury. "This builds on the agreements we have reached with the Isle of Man, Guernsey, and Jersey and the discussions currently underway with the Overseas Territories."

Aside from George Osborne, the letter was also signed by Germany's Wolfgang Schaeuble, Spain's Cristobal Montoro Romero, France's Pierre Moscovici, and Italy's Vittorio Grilli.

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