Liechtenstein Banks Welcome US FATCA Deal
by Ulrika Lomas, Lowtax.net, Brussels
23 May, 2014
The Liechtenstein Bankers Association (LBA) has said the intergovernmental agreement (IGA) for the implementation of the US Foreign Account Tax Compliance Act (FATCA) will secure access for Liechtenstein financial institutions to the US capital market and guarantee legal certainty in their dealings with US clients.
The LBA said the deal represents a further milestone in the Principality's tax strategy. It noted that the agreement, and especially the reporting system based on it, is of great significance as it will serve as the model and basis for a global automatic exchange of information standard.
From July 1, 2014, new clients of Liechtenstein FFIs will be subject to additional registration requirements aimed at identifying US persons. Meanwhile, Liechtenstein's existing clients will be comprehensively assessed by June 30, 2014. Liechtenstein FFIs will have to be report information automatically from September 30, 2015.
On a practical level, the group admitted that although financial entities are prepared for the new regulations, implementation will represent a huge challenge for intermediaries. It said a domestic legal basis must be established and reporting procedures set up.
Liechtenstein and the US recently signed a Model One IGA, requiring the Principality's Tax Administration and the US Internal Revenue Service (IRS) to exchange information automatically on accounts held by US citizens and by persons resident in the US in foreign financial institutions (FFIs) in Liechtenstein.
Model One IGAs have been signed by other agreement countries, with the exception of Japan, Switzerland, Austria, Chile, and Bermuda, which have signed a Model Two IGA. The Model Two treaty agrees that the country concerned will ensure that its laws and regulations permit its FFIs to perform the reporting procedures laid out under FATCA.
LBA Director Simon Tribelhorn said the association was closely involved in the drafting of the IGA, which, he said, ensures that local institutions can continue to participate in the US capital market and can deal with US persons with greater legal certainty.
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