Some encouraging news for US Expats in Italy

US authorities have agreed to pursue an intergovernmental framework with a number of European countries for the implementation of tax rules that is expected to lighten the regulatory burden for fund managers, experts say. The US, France, Germany, Italy, Spain and the UK has published a joint statement that sets out a common approach to combat tax evasion, where firms would report information on foreign taxpayers to their local authorities rather than directly to the US authorities.  The Foreign Account Tax Compliant Act (Fatca) originally required foreign funds to enter into an agreement with the IRS or otherwise face hefty tax penalties. Under the new proposals, firms in Fatca-partnering countries will not have to enter into a detailed agreement with the IRS, but only "register" with the tax authority.

The Foreign Account Tax Compliance Act,  (FATCA) 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 IRS, potentially in breach of their home countries' privacy laws. Those that did not comply faced, among other penalties, a 30% withholding tax on payments received from the US.


This might open up the road for European companies to start doing business with US citizens resident in foreign countries, once again.