ABBL and ALFI have announced last week that according to consultations with the Luxembourg tax authorities Luxembourg financial institutions are permitted to apply a transition relief with respect to entity accounts opened in the second half of 2014.
The US Internal Revenue Services’ Notice 2014-33 allows Foreign Financial Institutions (FFIs) to treat entity accounts opened on or after 1 July 2014 and before 1 January 2015 as preexisting entity accounts for purposes of implementing the due diligence, withholding, and reporting requirements applicable under FATCA. This relief is now also available for Luxembourg financial institutions. Under the previous rules, entity accounts treated as preexisting entity accounts were only those accounts maintained as of 30 June 2014. The application of the transition relief is not mandatory and thus remains at the discretion of each Luxembourg financial institution.
The U.S. Treasury Department updated its FATCA webpage to report the following developments:
- Algeria, Anguila, Bahrain, Cabo Verde, the Dominican Republic, Haiti, Malaysia, Montenegro, Serbia and Uzbekistan each reached an “agreement in substance” for a Model 1 intergovernmental agreement (IGA) with the United States, and consented to this status as of 30 June 2014.
- Greenland reached an “agreement in substance” for a Model 1 intergovernmental agreement (IGA) with the United States, and consented to this status as of 29 June 2014.
- Iraq, Moldavia, Nicaragua, and San Marino each reached an “agreement in substance” for a Model 2 IGA with the United States, and consented to this status as of 30 June 2014.
In early April 2014, the IRS and Treasury Department announced that foreign financial institutions (FFIs) located in a jurisdiction that has reached an “agreement in substance” with the United States, under the FATCA regime, will be treated as having an agreement in effect until the end of 2014.
The Treasury Department posted text of the intergovernmental agreements (IGAs) between the United States and the British Virgin Islands and between the United States and Israel. Both IGAs follow the Model 1 IGA, and are dated 30 June 2014 (according to the Treasury postings).
Read text of the IGA with the BVIs (PDF, 421 KB)
Read text of the IGA with Israel (PDF, 415 KB)
The Treasury Department also posted text of the intergovernmental agreement between the United States and Latvia. The IGA follows the Model 1 IGA, and is dated 27 June 2014 (according to the Treasury postings).
Read text of the IGA with Latvia (PDF, 444 KB)
On 2 July, Canada’s Finance Department announced that an intergovernmental agreement (IGA) between Canada and the United States, for the enhanced exchange of tax information, entered into force 27 June 2014.
The IGA between Canada and the United States was signed in February 2014, and follows the Model 1 IGA under the U.S. FATCA regime.
In Canada, legislation to implement the IGA, including related amendments to the Income Tax Act, was set out in Part 5 of Bill C-31, which received Royal Assent on 19 June 2014.
According to the Finance Canada release, the provisions of the IGA generally have effect in Canada as of 1 July 2014, and include:
- Requirements, outlined in Annex I of the IGA, for Canadian financial institutions to institute due diligence procedures to identify accounts held by U.S. persons.
- Reciprocal information exchanges between the Canada Revenue Agency and the IRS will begin by the end of September 2015.
Read text of the Canada-United States IGA (PDF, 202 KB)
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