Texts of BVI and Israel IGAs Released; Iraq Agrees in Substance with IGA

The U.S. Treasury Department ("Treasury") released the text of the FATCA Intergovernmental Agreement ("IGA") entered into between the United States and the British Virgin Islands ("BVI") on June 30, 2014, as well as the text of the IGA signed by Israel and the United States, also on June 30, 2014.

Both IGAs contain alternative procedures in Annex I that reflect the six-month transition rule announced in Notice 2014-33 that permits Foreign Financial Institutions ("FFIs") to treat new accounts opened by entities between July 1, 2014 and December 31, 2014 as "pre-existing accounts," providing more time to document the status of such account holders under FATCA. These IGAs also include an alternative special due diligence procedure for IGA countries that have not yet revised their laws to require FFIs in their countries to comply with the Annex I due diligence obligations. Under this alternative procedure, FFIs would have until the first anniversary of the date of entry into force of the IGA to complete due diligence and obtain required self-certifications from account holders on new accounts opened by individuals and entities prior to the earlier of (i) the date on which the local government has the ability to compel FFIs to comply with the normal due diligence procedures in Annex I or (ii) the date of entry into force of the IGA. In mid-June, the Treasury modified its form Annex I to both the Model 1 and Model 2 IGAs to include these clauses. In Notice 2014-33 the IRS said it would extend these procedures to previously signed IGAs. The BVI and Israeli IGAs are to be the first two signed agreements to include this language. Under the "Most Favored Nation" clause of the standard IGA, these clauses will be automatically considered included in previously signed IGAs, effective as of June 30, 2014.

The Treasury also announced that Iraq agreed on June 30, 2014 to enter into a Model 2 form of IGA.

See: Israel FATCA Agreement; BVI FATCA Agreement.See also: Cabinet Compilation of FATCA Agreements and Statements, Organized by Country; Cabinet FATCA Materials (both resources are available to Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.