Canada and Hungary Sign FATCA IGAs with the United States

The U.S. Treasury and Finance Canada announced today that the U.S. and Canada signed an Intergovernmental Agreement ("IGA") under FATCA. The U.S. Treasury also announced that an IGA was signed with Hungary.

The U.S.-Canada IGA is a Model 1A (Reciprocal) version, under which financial institutions in Canada will report information with respect to accounts held by U.S. citizens, residents (including dual U.S./Canadian residents) and entities in Canada to the Canada Revenue Agency ("CRA"). The CRA will then automatically exchange such information with the U.S. IRS pursuant to the existing Canada-U.S. Tax Convention (the "Convention"). Since the IGA is reciprocal, financial institutions in the United States will be required to report similar account information on depository accounts held by Canadian residents in the United States and U.S. source income with respect to other types of financial accounts when the account holder is a resident of Canada to the extent such income is subject to information reporting under the Internal Revenue Code. The U.S. agreed to pursue the adoption of additional regulations and legislation to expand the information that it may exchange with Canada so that equivalent levels of reciprocal automatic information may be exchanged between the countries.

Annex II to the Canadian IGA contains a handful of differences from the current Model 1 Annex and specifically exempts from FATCA reporting a number of Retirement Plans and Savings Accounts, including Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Pension Plans, Deferred Profit Sharing Plans and Eligible Funeral Arrangements, all of which are as described in the Income Tax Act of Canada, and exempt organizations, as described in paragraph 3 of Article XXI of the existing Convention.

The Treasury also announced that it signed a FATCA IGA with Hungary. This IGA is also a Model 1A reciprocal version.

Copies of both IGAs (including Annexes) are linked below, as are press releases issued by Treasury and Finance Canada.

See: Cabinet FATCA page.