Luxembourg Banking Body Issues FATCA Guide
by Ulrika Lomas, Lowtax.net, Brussels
30 May, 2014
The Luxembourg Bankers Association (ABBL) has published guidance on the intergovernmental agreement that the territory has concluded with the United States to support local financial institutions to comply with the Foreign Account Tax Compliance Act (FATCA).
ABBL said the aim of its document is to provide elements of guidance on matters relevant to Luxembourg financial institutions, and, where applicable, to identify best practices among institutions. It said the content of the document is likely to evolve on the basis of subsequent developments, in particular the ratification of the Luxembourg IGA and any additional instructions from either Luxembourg tax authorities or the US Internal Revenue Service. As the document does not set out an exhaustive list of the obligations applicable to Luxembourg financial institutions in relation to FATCA, ABBL will circulate a revised version of the guidance notes whenever appropriate, it added.
ABBL explained that Luxembourg entered into a Model One IGA with the US as part of an "evolution towards automatic exchange of information (AEI) between tax authorities as an emerging international standard." The group noted that the agreement provides for the automatic exchange of information between Luxembourg and US tax authorities on financial accounts held in Luxembourg by US persons, and vice versa.
It said: "The aim of this decision is to put Luxembourg's relations with the US in line with a declaration of April 10, 2013, by which Luxembourg announced that it will introduce, on January 1, 2015, and within the current scope of the European Union Savings Directive (Council Directive 2003/48/EC), the automatic exchange of information within the European Union. Luxembourg wishes to see the same conditions apply to all competing financial centers."
It said the early start of the negotiation process, coupled with the timely signature of the agreement in March, "not only puts Luxembourg on par with other leading financial centers in Europe, but also provides our members with much needed certainty as to the applicable framework for the implementation of FATCA."
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