Draft FATCA FFI agreement released along with guidance on upcoming regulation changes
The IRS released Notice 2013-69 as guidance to foreign financial institutions (FFIs) entering into an FFI agreement with the IRS under the FATCA provisions and to be treated as participating FFIs. The notice also includes text of a draft FFI agreement. Notice 2013-69 (PDF, 170 KB) states that the FFI agreement will be finalized by 31 December 2013.
Notice 2013-69 provides guidance to FFIs and Reporting Model 2 FFIs on complying with the terms of an FFI agreement. A Reporting Model 2 FFI is defined as an FFI and branch of an FFI treated as a reporting financial institution under a Model 2 Intergovernmental Agreement. Highlights:
- The background on the statutory and regulatory requirements for FFIs to be exempt from withholding under the FATCA provisions
- A description of the general responsibilities of participating FFIs and reporting Model 2 FFIs,
- Intended updates to the regulations under the FATCA and withholding provisions of the Code and related forms, such as:
- Coordination language with current regulations under Chapters 3, 61 and Section 3406
- Transitional reporting requirements for calendar years 2015 and 2016 accounts of NPFFIs
- Direct reporting NFFEs or sponsored direct reporting NFFEs
- Insurance company election to be treated as a U.S. insurance company section 953(d) will meet the definition of U.S. person under FATCA
- Procedures for FFIs to register for participating FFI or reporting Model 2 FFI status
- A draft FFI agreement, which substantially incorporates the provisions set forth in Reg. section 1.1471-4 (the FATCA final regulations)
Hungary - FATCA agreement initialled with United States
Hungary's Ministry for National Economy on 28 October 2013 announced that representatives of the governments of Hungary and the United States initialled a Model 1 intergovernmental agreement (IGA) to allow for an automatic exchange of information pursuant to the U.S. legislation known as FATCA (Foreign Account Tax Compliance Act).
The Hungarian government announcement reports that the Model 1 IGA agreement allows for the automatic exchange of information between financial institutions and aids in combating international tax evasion.
The IGA now must be considered and approved by Hungary’s parliament.
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