Luxembourg

Foreign Account Tax Compliance Act (FATCA) 

On 17 January 2013, the U.S. Department of Treasury and the Internal Revenue Service (IRS) released the final FATCA regulations. Enacted in March 2010, the goal of FATCA is to obtain information relating to U.S. persons that have offshore accounts or investments in order to combat offshore tax evasion by such persons.

 

FATCA applies to:

 

  •  U.S. withholding agents to the extent they make withholdable payments to foreign entities.
  • Non-U.S. entities to the extent that they meet the definition of a Foreign Financial Institution (FFI). The term FFI may include banks, brokers, insurance and reinsurance companies, investment funds, management companies, as well as certain other professionals of the financial sector (PFS).

 

Non-U.S. entities that fail to comply will be subject to a 30% withholding tax on certain U.S. source payments. In absence of a Model I Intergovernmental Agreement (IGA) between the country of incorporation and the U.S., an FFI must either enter into a direct agreement with the IRS to be Participating FFI (PFFI) or meet the requirements of one of the many types of Deemed Compliant FFI (DCFFI) to avoid withholding penalty. Certain non-financial foreign entities (NFFEs) also face potential withholding under FATCA if they fail to disclose their substantial U.S. owners.

Intergovernmental Agreements (IGAs) with Partner jurisdictions

 

As an alternative to the final FATCA regulations, the U.S. Treasury published two Model IGAs, i.e. Model I and Model II, which facilitate the implementation of FATCA for FFIs resident in a partner jurisdiction which signed an IGA.

 

Luxembourg signed a FATCA Model 1 IGA with the Unites States for the exchange of tax information. In this context the Luxembourg government set up with the IGA a legal framework compelling all Luxembourg Financial Institutions to comply with a set of due diligence, withholding and reporting requirements.

 

In the Spotlight



In this issue, Sarah Brook speaks to Gerard Laures on the FATCA agreement (IGA) signed by Luxembourg.

Don't see the video? Please click here to access.

How we can help

Complying with the FATCA rules will not only be a major compliance task to fulfill due to extended information reporting but will also influence your business strategy and the markets you serve.

 
Now that the IGA has been released, we can help you achieve smart Luxembourg compliance towards FATCA…
 

 

…we focus on all you need, not more, not less.

 

Timeline

Hover your mouse over the picture to display the different dates and details or click here to access a printable version (PDF, 367 KB)
 
IRS registration
 
Due diligence
 
Withholding
Reporting

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Tax

Georges Bock

Managing Partner

Tel. +352 22 51 51 - 5522

georges.bock@kpmg.lu

 

Gérard Laures

Partner

Tel. +352 22 51 51 - 5549

gerard.laures@kpmg.lu

 

Frank Stoltz

Partner

Tel. +352 22 51 51 - 5520

frank.stoltz@kpmg.lu

 

Advisory

Vincent Koller

Partner

Tel. +352 22 51 51 - 7922

vincent.koller@kpmg.lu