Romania

Details

  • Type: Publication series
  • Date: 4/7/2014

IRS announces long-awaited news for Romania addressing FATCA implementation 

            

Ramona Jurubita

Partner, Deputy Head of Tax

On 2 April 2014 The US Department of the Treasury and the Internal Revenue Service (IRS) published Announcement 17/2014, which states that jurisdictions that have reached “agreements in substance” with the United States on the terms of intergovernmental agreements (IGAs) under FATCA can be treated as having agreements in effect until the end of 2014.

 

Ionut Mastacaneanu

Tax Senior Manager

 

Romania is included in the list of countries that have reached a Model 1 agreement in substance and will be treated as having an IGA in effect from 2 April 2014.

As Ramona Jurubiță, Deputy Head of Taxation Services at KPMG in Romania states: “This represents long awaited good news for Romania as the registration deadline on the IRS website of 25 April 2014 is fast approaching.  Up until now, it has been uncertain whether Romania would be considered a jurisdiction having a Model 1 IGA in effect before the registration deadline.” The agreement in substance will have effect until 31 December 2014, the date by which the formal IGA must be signed between Romania and the United States in order for the benefits of IGA status to continue without interruption.

 

Following this announcement, Romanian Foreign Financial Institutions (FFIs) will now be able to register on the FATCA registration website as a registered deemed-compliant FFIs. Moreover, withholding agents will not be required to obtain the Global Intermediary Identification Number (GIIN) of Romanian FFIs for payments made before 1 January 2015. Ionuţ Măstăcăneanu, Senior Manager in KPMG in Romania’s Tax Department points out that: “According to Announcement 1/2014, previously issued by the IRS, FFIs under Model 1 IGA will be granted, under certain conditions, additional time beyond 1 July 2014 (i.e. until 22 December 2014) to register and obtain a GIIN in order to ensure that they are included on the IRS FFI list before 1 January 2015.”

 

In addition, based on IRS experience with processing the registrations that have been submitted to date, the announcement also extends the registration deadline for FFIs by 10 more days (until 5 May 2014). Prior to this notice, FFIs had been required to register by 25 April 2014, to be certain that they would be included on the first IRS FFI list, the only list that will be published before withholding begins.

 

Currently, the United States has signed 26 IGAs, with 19 additional countries and jurisdictions that are treated as having IGAs in effect, bringing the total number of countries that are treated as having IGAs in effect to 45. According to IRS representatives, this list is expected to continue to grow in the coming weeks, as additional countries provide consent to having the status of their IGAs disclosed and additional agreements in substance are reached.

 

FATCA represents a series of information reporting and withholding tax provisions published on 18 March 2010 by the IRS published as part of the HIRE Act (Hiring Incentives to Restore Employment Act), adding new clauses to the United States’ Internal Revenue Code. According to FATCA, FFIs are required to report to the IRS certain information with respect to U.S. accounts or accounts held by entities with substantial U.S. ownership. Recalcitrant individuals and FFIs not participating in FATCA will be penalized by having 30 percent of certain U.S.-source payments made to them withheld.

 

Share this

Share this