Holy See and United States Sign Historic Agreement to Fight Offshore Tax Evasion

Today, the Holy See’s Secretary for Relations with States, Archbishop Paul Gallagher, 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 and on behalf of the Vatican City State) and the United States of America to improve international tax compliance and exchange of tax information in view of the U.S. Foreign Account Tax Compliance Act (FATCA).

This agreement – which is the first formal inter-governmental 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.

Mr. Ambassador,

At the outset, let me welcome you and your delegation to the Secretariat of State on the occasion of the signing of the
Agreement between the Holy See, Acting Also in the Name and on Behalf of the Vatican City State, and the United States of America to Improve International Tax Compliance and to Implement the United States’ Foreign Account Tax Compliance Act (“FATCA”).

The signing of this agreement is unquestionably an historic event. This is in fact the first time that the Holy See and the United States of America have concluded a formal intergovernmental agreement, thus raising to an even higher level the broad cooperation and friendship that already exist between the Apostolic See and the Government of the United States. Moreover, the subject matter of this agreement – designed to contrast tax evasion through the exchange of relevant information – is of key importance to both the Holy See and the United States. As Pope Francis frequently reminds us, evading just taxes is stealing both from the State and from the poor (cfr. Homily at
Domus Sanctae Marthae, 11 November 2013). Every person has in fact the duty to contribute, in charity and justice, to the common good, according to his own abilities and the needs of others, by promoting and assisting the public institutions dedicated to bettering the conditions of human life (cfr.
Gaudium et Spes 30). We must then not forget the injunction of the Apostle: “
Pay to all their dues, taxes to whom taxes are due, toll to whom toll is due, respect to whom respect is due, honor to whom honor is due” (Rm 13,7).

As you know, in the course of the last five years, the Holy See and the Vatican City State have adopted the highest international standards to ensure transparency and legality in the financial sector, while bearing in mind that “
man is the source, the center, and the purpose of all economic and social life” (
Gaudium et Spes 63). Signing the present agreement is thus a further step in the Holy See’s long-term strategy to ensure and promote legality, transparency and ethical behaviour in the economic and financial fields.

Finally, I would like to thank you personally, as well as all those who took part in the negotiations, for the constructive spirit and the strenuous efforts that have enabled us to reach a mutually satisfactory agreement. 

Thank you.

I am pleased to be here for the historic signing of the agreement with the Holy See implementing the Foreign Account Tax Compliance Act, or FATCA. We welcome the Holy See’s commitment to intensifying our cooperation to promote global financial transparency through improving international tax compliance.

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. It also aligns with our mutual commitment to work together to detect, deter, and discourage offshore tax abuses through increased transparency and enhanced reporting. In partnership with the Holy See, we are working towards building a stronger, more stable, and more accountable global financial system.

Offshore tax evasion is a pressing concern. Of all the measures that could be taken to eliminate world poverty, stopping tax evasion may be one of the most effective options. Every year, tax evasion deprives governments of all sizes of much-needed resources to fund public services and investments. As President Obama said, “The idea that a child may never be able to escape poverty because she lacks a decent education or health care, or a community that views her future as their own, that should offend all of us and it should compel us to action.”

Because access to information from other countries and jurisdictions is critically important to the full and fair enforcement of U.S. domestic tax laws, information exchange is a top priority for the United States. As such, we have been a leader in the development of new international standards for greater transparency through full exchange of tax information.

This FATCA agreement is yet another example of the close and collaborative relation between the Holy See and the United States on global issues.