Luxembourg Ministry of Finance announces negotiations for an intergovernmental agreement with the U.S.
On 17th December 2012, the Luxembourg Ministry of Finance issued a press release concerning the US Foreign Account Tax Compliance Act (FATCA).
Finance Minister Luc Frieden stated at an event on 11th of December that he decided to enter shortly into negotiations to conclude an intergovernmental agreement between Luxembourg and the U.S., in order to pave the way for the implementation of FATCA.
FATCA regulations were put in place to enable the U.S. tax authorities to tackle the fiscal evasion of Americans, who live or invest overseas. FATCA seeks to achieve this goal by forcing non-U.S. financial institutions into concluding agreements with the U.S. Internal Revenue Service, agreements that are imposing significant due diligence, withholding and reporting obligations.
An intergovernmental agreement between the Luxembourgish and US authorities should help to improve international tax compliance, to address the legal impediments to compliance and to simplify practical implementation of the FATCA framework.
The press release states that the first discussions were launched on 19th November 2012 in preparation for the negotiations, which should lead to a conclusion within the first half of 2013. An intergovernmental agreement would allow financial institutions to adapt, with all legal certainty, to the given legislation, and to guarantee the competitiveness of the Luxembourg financial sector.
For your reference
Newsletter Issue 2012-13 on the Model II
Newsletter Issue 2012-06 on the two versions of Model I
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