Estonia Signs FATCA IGA with the U.S.

The Republic of Estonia announced that it has signed an Intergovernmental Agreement ("IGA") with the United States to implement FATCA. The IGA is a Model 1A IGA (Reciprocal) under which financial institutions that are organized under the laws of Estonia, and branches of non-Estonian financial institutions located in Estonia, will be required to provide identifying and account information on accounts directly or indirectly held by U.S. persons to the Estonian Ministry of Finance or its delegate for automatic transmittal to the U.S. Internal Revenue Service. In addition to typical exclusions for certain broad and narrow-based retirement plans from FATCA reporting, Annex II to the IGA also specifically exempts from FATCA reporting pension contracts provided by life assurance undertakings, and insurance contracts for supplementary funded pensions provided by life assurance undertakings (defined under the Estonia Funded Pensions Act).

A Memorandum of Understanding entered into by both countries on the same day on which they entered into the IGA provides that, in the case of securities registered in the Estonian Central Register of Securities 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, and such other financial institutions will be responsible for any reporting required with respect to such financial accounts. Nonetheless, the registrar of the Estonian Central Register of Securities may instead make reports on behalf of such other financial institutions.

See: Bilateral Agreement between U.S. and Estonia to Implement FATCA. See also: Cabinet FATCA Materials (for Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.