FATCA AND THE US – DUTCH INTERGOVERNMENTAL AGREEMENT

Dutch IGA published

In connection with the Foreign Account Tax Compliance Act (“FATCA”), the government of the Netherlands entered into a Model 1 Intergovernmental Agreement (“IGA”) with the United States (click here). Under the Dutch IGA, Netherlands financial institutions would report required information to the Netherlands tax authorities, followed by an automatic exchange of the reported information to the IRS.

The Dutch IGA, entered into on December 18, 2013, is substantially similar to the Model 1A IGA that includes a reciprocal approach for the sharing of information between the two governments. Article 3 paragraph 7 of the Dutch IGA provides that all information exchanged thereunder shall be subject to the confidentiality and other protections provided for in the Double Tax Convention (December 18, 1992, as amended in 1993 and 2004) and the Mutual Assistance Convention (January 25, 1988), including the provisions limiting the use of the information exchanged.

In connection with the FATCA, the government of Curaçao also intends to enter into a Model 1 Intergovernmental Agreement with the United States.

Karel Frielink
Attorney (Lawyer) / Partner

(4 February 2014)

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Update (3 April 2014)

FATCA Jurisdictions Treated as Having an IGA in Effect and 10 Day Extension for FFI Registration

Foreign financial institutions (FFIs) and US withholding agents (USWAs) have presented compliance concerns to Treasury and the IRS about the status of FFIs in jurisdictions that are known to be in an advanced stage of concluding an IGA, but have not yet signed such agreement. Treasury has signed IGAs with 26 jurisdictions and has reached agreements in substance or is in advanced discussions with many others.

Treasury and the IRS have on April 2, 2014 issued Announcement 2014-17 to provide some level of comfort to FFIs in such jurisdictions that already have reached an IGA in substance and to USWAs paying agents.

Moreover, the IRS has also granted an extension of 10 (ten) days, previously April 25 but now May 5, 2014 (GMT -5), for an FFI to register via the FATCA Registration Portal to be included on the PFFI Global Intermediary Identification Number (GIIN) list to be issued June 2, 2014.

On July 1, 2014 FATCA withholding must be implemented for certain transactions (see Chapter 12 FATCA Withholding Compliance, LexisNexis® Guide to FATCA Compliance). FATCA requires that a withholding agent must obtain an FFI’s GIIN for payments made from July 1, 2014 and must confirm that the GIIN appears on the IRS FFI List. However, an exception provides that a withholding agent does not need to obtain a reporting Model 1 FFI’s GIIN for payments made before January 1, 2015.”

Source: Professor William Byrnes (click here for more info)

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