Finland and Chile Latest to Sign FATCA IGAs; Luxembourg Reports IGA Agreement in Substance

Finland and Chile each signed Intergovernmental Agreements ("IGAs") under FATCA with the United States on March 5.

Finland agreed to a Model 1A (Reciprocal) form of agreement under which Finnish Financial Institutions will be required to report information about accounts held directly or indirectly by U.S. persons to Finland's tax administration, which will in turn forward such information to U.S. tax authorities. Annex II to the Finnish IGA makes it clear that Finnvera Oyj – Finnvera plc, Vientiluotto Oy – Finnish Export Credit Ltd, and Kuntarahoitus Oyj – Municipality Finance plc are each Nonreporting Finnish Financial Institutions and exempt beneficial owners under FATCA. In a Memorandum of Understanding ("MOU") entered into between the United States and Finland on the same day, the countries agreed that in the case of securities registered in a Finnish Central Securities Depository (Arvopaperikeskus) that are held by or through one or more other Financial Institutions other than Nonparticipating Financial Institutions, the relevant Financial Accounts will be treated as held by such other Financial Institutions, which will be responsible for any reporting required with respect to such Financial Accounts. The MOU also clarified that a Certificate of Fiscal Residence issued by the Finnish Tax Administration is considered acceptable documentary evidence to establish an Account Holder's Non-U.S. status. A copy of the IGA between the United States and Finland, as well as the MOU is linked below.

Chile has announced that it entered into a Model 2 IGA with the United States on March 5. Under the terms of the agreement, Chilean Financial Institutions will report information on accounts held, directly or indirectly, by U.S. persons directly to the United States. To the extent that pre-existing account holders refuse to consent to information being transmitted to the IRS, the Chilean Financial institution must report aggregate information with respect to accounts held by U.S. persons. Although the text of the IGA has not yet been released, it has been reported that the agreement excludes Chile's privately run system of pension funds from FATCA reporting, as well as certain savings and credit cooperatives with assets totaling less than $175 million.

Luxembourg has announced that it has reached an agreement in substance with the United States with respect to a FATCA IGA Model 1 (presumably a reciprocal version). According to a statement released by the Luxembourg Ministry of Finance, the English text of the IGA has been finalized and as soon as the French version is validated by both countries, the IGA will be signed, followed by Luxembourg parliamentary approval.

See: Agreement between U.S. and Finland; Finland MOU; Luxembourg Press Release. See generally: Cabinet FATCA Materials (accessible to Cabinet subscribers only). For more information, please contact Daniel Mulcahy and Mark Howe.