FATCA Update -IRS Issues Draft Agreement for Foreign Financial Institutions
On October 29, 2013, the IRS issued Notice 2013-69, which provided a draft of the FFI agreement foreign financial institutions subject to the FATCA regulations or which fall under a Model 2 Intergovernmental Agreement must sign. This agreement will not need to be signed by investment funds and investors which are expected to be covered under Model 1 Intergovernmental Agreement (which includes most funds, including those domiciled in the Cayman Islands).
In addition to providing the draft FFI agreement, the notice also includes background on the statutory and regulatory requirements to be exempt from FATCA withholding, a description of the general responsibilities of participating FFIs and reporting Model 2 FFIs, and procedures for FFIs to register for participating FFI or reporting Model 2 FFI status. Registration with the IRS pursuant to an FFI agreement or otherwise is achieved by logging on to the IRS portal at irs.gov/fatca.
This notice is the latest piece of information issued since Notice 2013-43 was released several months ago. Notice 2013-43 generally provided for a six-month delay for the implementation of many aspects of FATCA registration and compliance. For our most recent article on this notice, please click here .
In the Treasury Department press release which was issued with Notice 2013-69, it was stated that currently there are 9 signed IGAs, 16 IGAs which have be agreed to in substance, and many more IGA negotiations currently active with other jurisdictions. The press release also indicated that the final FFI agreement will be completed by year-end in order to give affected parties enough time to be ready prior to implementation date of July 1, 2014.