This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print this page

November 26, 2013: Costa Rica FATCA Intergovernmental Agreement

Foreign Account Tax Compliance Act (FATCA)


DOWNLOAD  

Costa Rica and the United States sign a FATCA Intergovernmental Agreement

On November 26, 2013, Costa Rica and the United States signed an Intergovernmental Agreement (“IGA”) to improve international tax compliance with respect to FATCA. The agreement is substantially similar to the last Model 1 Agreement signed (France FATCA IGA) but it includes 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:

  • The commitment of the U.S. to exchange information with the Government of the Republic of Costa Rica, pursuing equivalent levels of exchange, is limited to appropriate safeguards and infrastructure for an effective exchange relationship in place.
  • From a geographical standpoint, the definition of a U.S. territory is amended to remove the reference to the definition of the U.S.
  • Consistent with the France IGA, the Costa Rica IGA incorporates the FATCA deadlines included in Notice 2013-43.
  • Article 3 related to the time and manner of exchange of information is modified to include three new paragraphs (paragraph 8, 9 and 10). These 3 paragrapghs were included in the revised version of the Model 1A IGA released by the Treasury on August 19, 2013. However, the Costa Rica IGA is the first Model 1A IGA signed that includes these new sections.
    • Paragraph 8 requires each Competent Authority1 to provide written notification when appropriate safeguards are in place to (i) ensure the confidentiality of the information and to ensure the information’s sole use is for tax purposes and (ii) an infrastructure for an effective exchange relationship is established by the jurisdiction.
    • Additionally, paragraph 8 incorporates the commitment of the Competent Authorities to endeavor in good faith to establish these safeguards and to have the infrastructure in place before September 2015.
    • Paragraph 9 establishes that the obligations to obtain and exchange information will take effect on the date there has been written notification that an infrastructure for an effective exchange relationship has been established. However, if the U.S. Competent Authority requires additional time to establish that Costa Rica has the safeguards and infrastructure in place, the obligation of Costa Rica to exchange information will take effect on the date of the written notification provided by the Costa Rican Competent Authority.
    • Paragraph 10 contains a new termination clause: the IGA will terminate if the obligations to obtain and exchange information described in Article 2 of the IGA are not in effect by September 30, 2015.
  • The IGA will enter into force on the date of Costa Rica’s written notification to the U.S. that it has completed its necessary internal procedures.
  • Both Annex I (related to Due Diligence obligations) and Annex II (related to non reporting financial institutions and products) are based on the revised version of the Model 1A IGA released by Treasury on November 4th, 20132.

Full article and U.S. Department of the Treasury’s announcement are available for download. For more information please contact a Deloitte FATCA Leader or click here.

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.

1 The Director of the Tax Administration for Costa Rica (“Director General de Tributacion”)
2 Except for the special rule related to collective investment vehicles issuing physical shares in bearer form.

Last updated

Related links

Share this page

Email this Send to LinkedIn Send to Facebook Tweet this More sharing options

Stay connected