Luxembourg

Details

  • Service: Tax, Financial Services
  • Industry: Financial Services
  • Type: Newsletters
  • Date: 7/15/2014

Contact

Gérard Laures
Partner, Tax
Tel. +352 22 51 51 5549

gerard.laures@kpmg.lu

 

Frank Stoltz
Partner, Tax
Tel. +352 22 51 51 5520
frank.stoltz@kpmg.lu

FATCA e-alert Issue 2014-22 

July 2014

Luxembourg to apply transition relief with respect to entity accounts opened in the second half of 2014

 

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.

 


 

New IGAs reached "in substance"

 

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.

 


 

Text of IGAs with BVIs, Israel and Latvia

 

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)

 


 

IGA enters into force in Canada

 

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)

 

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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