Treasury Issues Revised Model 1 IGAs (FATCA)

The U.S. Treasury has updated the Model 1A (Reciprocal) and Model 1B (Nonreciprocal) IGAs to conform with signed IGAs with various countries, as well as with the Model 2 IGA. Model 1 IGAs provide for foreign financial institutions resident in an IGA country to provide information about accounts held or owned directly or indirectly by U.S. persons or entities to the local government which will automatically forward such information to the U.S. The revised Models include a “most favored nation” clause, as well as a few tweaks in defining insurance companies subject to FATCA. They also clarify that a financial institution in an IGA country is presumed to be compliant, and not subject to withholding until the IRS specifically and publicly identifies the institution as noncompliant. Annex II of the revised Models provide for specific categories of exempt and deemed-compliant financial institutions (the original model was a blank template), generally following the format of IGAs signed to date. Included in revised Model Annex II is a specific deemed-compliant status for certain “local FFIs” and certain “collective investment schemes” (generally identical to those in the Irish IGA) that are owned entirely by other participating FFIs or deemed-compliant FFIs or interests in which are subject to reporting by another FFI.

View revised Model 1A and 1B IGAs.