The CEA also highlighted the conflicts between the reporting requirement and EU Data Protection Directive and potential data availability issues which could leave European insurers unable to comply with FATCA and thus subject to a 30 per cent withholding tax despite their best efforts.

The CEA's comments were made in its 27 June response to the consultation by the Inland Revenue Service (IRS) and the US Treasury on the draft implementing guidance on the documentation, reporting and withholding requirements for FATCA.

As the draft implementing guidance is mainly focused on banking, the CEA stressed that it is essential that insurance specificities are taken into account in the application of FATCA to life insurance. The CEA welcomed the acknowledgement by the IRS that it still needs to consider insurance in detail in its deliberations. It also points out specific areas that need to be considered when making the FATCA regime workable and more proportionate for the European insurance sector.

FATCA was passed by the US Congress last year and is intended to ensure that the US tax authorities obtain information on investments by US residents in foreign financial institutions.

Full position paper