Belgium and Australia Sign FATCA IGAs with U.S.; Bahamas, Cypress, among Other Countries with "in Substance" IGAs

Belgium and Australia have become the most recent countries to sign an Intergovernmental Agreement ("IGA") under FATCA with the United States.Both agreements are Model 1A form IGAs under which financial institutions in Australia or Belgium, as the case may be, will provide information about U.S. Reportable Accounts to its local tax authority, which will automatically forward such information to the U.S. IRS. In return, the United States promises to forward information currently reported under Chapter 3 of the Internal Revenue Code with respect to accounts held by Belgium or Australian residents at U.S. financial institutions to the respective foreign tax authorities.

Annex II to the Australian IGA specifically treats as Exempt Beneficial Owners (1) any plan, fund, trust, or other arrangement operated principally to administer or provide pension, retirement, superannuation or death benefits, that is a superannuation entity or public sector superannuation scheme (including an exempt public sector superannuation scheme) and (2) a pooled superannuation trust as defined in the Income Tax Assessment Act 1997. Also specifically treated as exempt accounts are superannuation/FHSA life insurance policies, certain exempt life insurance policies, retirement savings accounts, employee share schemes and share trusts, and certain funeral policies and scholarship plans, in each case as described in the Australian Income Tax Assessment Act of 1997. Australia and the United States simultaneously entered into a Memorandum of Understanding which provides that (i) securities registered in an Australian securities clearing and settlement facility that are held by or through one or more other Financial Institutions are to be treated as held by such other Financial Institutions and not by the clearing and settlement facility and (ii) a not-for-profit entity exempt from Australian income tax under Division 50 of the Australian Income Tax Assessment Act 1997 is treated as exempt from FATCA reporting as an active Non-Financial Foreign Entity.

The Belgium IGA specifically exempts from FATCA reporting certain collective Belgium savings funds established as part of a tax-favored pension scheme and occupational pensions subscribed to by the employer or the self-employed as defined in or for the purpose of Belgian laws, certain retirement savings accounts or life insurance, and certain long-term savings products as described in the Belgian Income Tax Code 1992.

In addition, the Treasury has added several countries to the list of countries with IGAs that are not signed but are substantially agreed to and which can be considered in effect through December 2014. These countries include the Bahamas, Bulgaria, Cyprus, Slovak and Sweden.

See: Model 1A IGA between Australia and U.S.; Model 1A IGA between Belgium and U.S.; MOU between Australia and U.S.See also: Cabinet FATCA Materials (for Cabinet subscribers only).For more information, please contact Daniel Mulcahy and Mark Howe.