• Service: Tax, Financial Services
  • Industry: Financial Services, Banking
  • Type: Newsletters
  • Date: 5/21/2013


Georges Bock

Managing Partner

Tel. +352 22 51 51 5522


Gerard Laures


Tel. +352 22 51 51 5549


Claude Poncelet


Tel. +352 22 51 51 5567


Frank Stoltz


Tel. +352 22 51 51 5520

Luxembourg Tax News / FATCA e-alert Issue 

May 2013

Luxembourg chooses Model 1 IGA for FATCA purposes


Luxembourg intends to sign Multilateral Convention on Mutual Administrative Assistance in Tax Matters



Luxembourg chooses FATCA Model 1 IGA


As announced by Luxembourg’s Finance Minister Luc Frieden on 21 May 2013, Luxembourg will sign a Model 1 Intergovernmental Agreement (IGA), representing a next important step towards automatic exchange of information (following the announcement beginning of April to automatically exchange information on interest payments at EU level).


This clearly demonstrates Luxembourg’s willingness to a comprehensive review of the current Exchange of Information framework to guarantee further cooperation for tax matters.


An IGA between the Luxembourg and US Authorities should help to avoid 30% penal withholding tax, to follow the international standards also accepted by the other important financial centers (Singapore, UK and Switzerland) and to play an active role in determining the practical implementation guidelines of the FATCA regime.


Such a Model 1 IGA will simplify the implementation of FATCA requirements for national financial institutions and includes numerous advantages in comparison to the final FATCA regulations and Model 2 IGA:


  • Provision under which national authorities only have to exchange information when both counterparties (Luxembourg and the US) have the necessary infrastructure and safeguards to confidentiality in place
  • National governments, instead of local financial institutions will be in charge of receiving information from and reporting to U.S. authorities
  • National authorities will have some authority to facilitate FATCA requirements through national guidelines to implementation (“interpretative authority”)
  • No need to name a so-called “responsible officer” to the U.S.
  • Luxembourg financial institutions only need to register with the IRS instead of entering into a contractual agreement with the IRS


Useful links


FATCA e- alert 2013-10 on updated IGA model agreements


FATCA e-alert 2012-15 on Luxembourg’s negotiations of an IGA


FATCA e-alert 2012-06 on Model I IGA



Luxembourg to sign Multilateral OECD Convention on Mutual Administrative Assistance in Tax Matters


Luc Frieden also announced that Luxembourg intends to sign next week the Multilateral OECD Convention on Mutual Administrative Assistance in Tax Matters. This Convention contains certain provisions also covered by the European Directive 2011/16/EU of 15 February 2011 on Administrative Cooperation in the Field of Taxation, in force as of 1 January 2013, and partially covered by some tax treaties, which have already been modified on the basis of the new OECD model. The OECD Convention expands the geographical scope of these existing provisions to EU and international law.



For further information, please do not hesitate to contact us.








Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.



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