Model Intergovernmental Agreement
Published 27 July 2012
The United States in conjunction with France, Germany, Italy, Spain and the United Kingdom has released a "Model Intergovernmental Agreement to Improve Tax Compliance and Implement FATCA". The agreement establishes a framework for the automatic exchange of information between the "FATCA Partner" country and the United States using existing bilateral income tax treaties or tax information exchange agreements.
As expected, the agreements will avoid the legal and privacy issues that would have prevented FATCA compliance from entities within the FATCA Partner countries. At a high level, both the reciprocal and non-reciprocal versions of the agreement should help financial institutions reach important FATCA objectives, while potentially reducing costs to comply.
Ireland is currently in discussions with US officials over adopting the FATCA Partner model and developments regarding the model agreements will therefore be of interest to financial service providers in Ireland.