On June 10, Archbishop Paul Richard Gallagher, secretary for Relations with States, and the U.S. Ambassador to the Holy See, Kenneth F. Hackett, signed an historic agreement between the Holy See (acting also in the name of and on behalf of Vatican City State) and the United States of America to improve international tax compliance and the exchange of tax information in view of the U.S. Foreign Account Tax Compliance Act (FATCA).
This agreement – which is the first formal intergovernmental agreement between the Holy See and the United States – underscores the commitment of both parties to promote and ensure ethical behavior in the financial and economic fields. In particular, this agreement will prevent tax evasion and facilitate the compliance of fiscal duties by those U.S. citizens who conduct financial activities in Vatican City State.
Ensuring the payment of taxes and preventing tax evasion are of crucial economic importance for every community since adequate tax revenues and public spending are indispensable for governments to become instruments of development and solidarity, to encourage employment growth, to sustain business and charitable activities, and to provide systems of social insurance and assistance designed to protect the weakest members of society.
In a context of economic globalization, it is therefore essential to strengthen the exchange of information with the view to prevent tax evasion. The present agreement is thus based on the most up-to-date global standards to curtail offshore tax evasion through the automatic exchange of tax information.