The lower house of Parliament has approved legislation that allows the exchange of information about banking accounts with other countries. The bill is a prerequisite for the implementation of the FATCA agreement with the United States which will require Czech financial institutions to inform US authorities about account owned by US citizens.
The bill’s adoption is necessary for the implementation of the FATCA agreement the Czech government signed with the US in August. Under the deal, Czech banks and other financial institutions will be required to inform the Internal Revenue Service in the US about all Czech bank accounts with a balance of over 50,000 US dollars owned by US tax payers.
Without the bill, any Czech institution willing to abide by the FATCA deal would risk acting in breach with current Czech law, mainly with provision related to confidentiality and personal data protection.
The MPs on Wednesday also backed the ratification of the FATCA agreement itself which passed through the so-called first reading and will now be debated in lower house committees before a final vote on it takes place.
Addressing the deputies, Finance Minister Andrej Babiš said both the bill and the agreement should curb tax evasion, and noted that a failure to pass the legislation would harm the Czech Republic’s reputation.
The Finance Ministry estimates the costs of the FATCA agreement’s implementation at around 18 million crowns for large banks. The costs for mid-sized banks are estimated at some two million, and one million for building societies.
FATCA, or the Foreign Account Tax Compliance Act, was adopted by US lawmakers in 2010, in the wake of a scandal involving untaxed funds at Swiss bank accounts. Institutions which do not comply with the act’s provision face penalties and fines, and could even be banned from doing business in the United States.