November 14, 2013: France FATCA Intergovernmental Agreement
Foreign Account Tax Compliance Act (FATCA)
France and the United States sign Intergovernmental Agreement and Memorandum of Understanding
On November 14, 2013, France and the United States signed an Intergovernmental Agreement (“IGA”) to improve international tax compliance with respect to FATCA. The agreement is substantially similar to other Model 1 Agreements signed by other European countries and does not include all the recent modifications in the revised version of the Model 1A IGA released by Treasury on November 4th, 2013.
There are a few items that should be noted:
- According to Article 2, the U.S. is committing to create rules to require both the collection and reporting of French taxpayer identification numbers (“SIRET number”) and the date of birth (if French TIN has not been assigned) for French residents.
- The France IGA incorporates the FATCA deadlines included in Notice 2013-43.
- Article 5 related to the collaboration on compliance and enforcement is modified to require compulsory notification when a competent authority has detected administrative errors or other minor errors. There will not be direct inquiries made to the Reporting Financial Institution.
- The favored nation clause is modified to allow France to decline the application of more favorable terms.
- Under Annex I (related to Due Diligence obligations), the main provisions that have been incorporated are:
- French financial institutions may elect to apply the due diligence procedures described in the U.S. Regulations separately for each clearly identified group of accounts. This ability to elect is also permitted in relation to other options available in Annex I (for example, in relation to the application of optional thresholds)
- There is an exception for documenting preexisting individual accounts that have been documented for certain other purposes.
- Consistent with the German IGA, a credit card or a revolving credit facility treated as a new entity account is not required to be reviewed, identified or reported, provided that the Reporting French Financial Institution maintaining such account implements policies and procedures to prevent an account balance owed to the Account Holder that exceeds $50,000
- A new alternative procedure for financial accounts held by individual beneficiaries of cash value insurance contracts.
Annex II of the agreement identifies the government entities, the Central Bank of France, certain international organizations in France as exempt beneficial owners. It identifies certain French pension funds (“Caisses de retraites”) and other French entities (“Caisses de congés payés”) as exempt beneficial owners as well. The categories of deemed-compliant entities under Annex II include certain small financial institutions with a French client base (note that certain requirements have been changed with respect to the previous IGAs), as well as for certain investment vehicles regulated under the laws of France (with specific rules), including collective investment vehicles, FCPEs and SICAVAS. Lastly, Annex II declares that certain accounts or products may be treated as exempt (such as retirement and other tax favored accounts and products).
As used in this document, “Deloitte” means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.