German IGA Under FATCA Published

The text of the Intergovernmental Agreement ("IGA") under FATCA between Germany and the United States was released by Germany on May 31, 2013, following approval of the IGA by the German Cabinet.As previously disclosed, the IGA is a reciprocal Model 1 IGA under which German financial institutions will report information with respect to financial accounts held directly or indirectly by U.S. persons to the German government for automatic transmittal of such information to the United States.

The text of the base IGA is essentially identical to the latest version of Model 1A (Reciprocal) published by Treasury. Annex II follows the earlier version of Annex II utilized by Treasury with references to specific German governmental entities, financial institutions and accounts, rather than the version published by Treasury initially on May 9, and revised on May 28. One item of note is that Annex II treats as a non-Financial Account under FATCA any Escrow Account held by notaries, lawyers and insolvency trustees that serves as an escrow solely with respect to transactions that are required by German law to be accomplished through a notary, lawyer or insolvency trustee.

Germany and the United States simultaneously entered into a "Declaration of Understanding" with respect to the IGA. The Declaration provides that Reporting German Financial Institutions must register with the IRS and obtain a Global Intermediary Identification Number which will be used to report information to the German government, but that Reporting German Financial Institutions are not otherwise required to register with the German government. The Declaration also provides that the IGA will be deemed effective, and German Financial Institutions will be considered compliant under FATCA, at least until September 30, 2015, and potentially until September 30, 2016, even if the IGA has not yet come into force under German law prior to such dates.

See: Germany IGA; Declaration.For a full summary of recent news relating to FATCA, see "Current Topics - FATCA."For a full discussion of FATCA, see the Guide to Hedge Fund Regulation - FATCA Chapter.