What is FATCA and Why does It Matter?
Dorota Francisciová
Mgr., doctoral student at the Institute of International and European Law at the Faculty of Law of Pan-European University and an enrolled student in the LL.M. program in Human Rights at the University of Vienna
Tax Information Exchange Agreements (TIEAs) are essential in combating tax evasion and financial crimes, especially in today’s globalized world. These bilateral agreements facilitate cooperation between tax authorities, ensuring that taxpayers fulfill their obligations, particularly in offshore jurisdictions where there is a risk of concealed income and assets. The Foreign Account Tax Compliance Act (FATCA) has played a pivotal role in this effort, requiring foreign financial institutions (FFIs) to report U.S. account holders’ information. The landmark case of United States v. UBS AG highlighted the necessity of such agreements, leading to increased transparency and the development of further international regulations such as the Common Reporting Standard (CRS) and EU Directive 2018/822 (DAC6). This article explores FATCA’s implementation, the roles of financial institutions, and the significant impact of these agreements on global tax compliance.
Keywords: Tax Information Exchange Agreement; FATCA; Financial institutions; Global tax compliance; Tax evasion
