The Institute for the Works of Religion (IOR) otherwise known as the Vatican Bank is the latest jurisdiction to join the growing list on the FATCA bandwagon. FATCA stands for Foreign Account Tax Compliant Act, a controversial effort by the U.S. government to curb international tax evasion.
The agreement between the Vatican bank and the United States was signed earlier this week in an ongoing effort to clean up the bank’s reputation.
In accordance to the agreement, the Vatican bank will report any accounts owned by U.S. persons to the U.S. government for purposes of taxation. There is estimated to be more than 15-thousand accounts owned by U.S. persons in the Vatican bank. The bank has been accused of being an offshore tax haven for foreign monies.
Archbishop Paul Gallagher, the Vatican’s Secretary for the Relations with States, and Kenneth Hackett, U.S. Ambassador to the Holy See, signed the FATCA agreement acting on behalf of the Vatican City and the United States of America.
Ambassador Hackett made the following statement. “Today’s signing marks a significant step in both the United States’ and Holy See’s efforts to work collaboratively toward a global standard to combat offshore tax evasion.”
The Holy See’s long-term strategy is to ensure and promote legality, transparency and ethical behavior in the economic and financial fields,” said Archbishop Gallagher at the signing.
This FATCA agreement is the latest step in a long-term plan to re-haul the Vatican bank’s reputation with a strong focus on transparency. The Vatican bank also recently signed an information sharing agreement with Italy.
Klueger & Stein, LLP provides clients with complex international tax advice, always keeping an eye open for any updates that may affect our clients’ best interest.