In the context of the current negotiations with the United States Department of Treasury pertaining to FATCA, Minister Frieden announced, on 21 May 2013, that Luxembourg has chosen the Model I Intergovernmental Agreement (IGA).
This agreement will provide, essentially, for an automatic exchange of information between the Luxembourg and American fiscal authorities on bank accounts held in Luxembourg by citizens and residents of the United States.
A similar approach has been adopted by the other Member States of the European Union that have announced to have either signed or initialed an IGA with the United States to date (that is, for the time being, the United Kingdom, Denmark, Ireland, Spain, Italy and, most recently, Germany).
According to Minister Frieden, this decision will put Luxembourg’s relations with the United States in line with the declaration of 10 April 2013 by which the Luxembourg Government announced that it will introduce, on 1 January 2015 and within the scope of the 2003 EU Savings Directive, the automatic exchange of information within the European Union.
The Luxembourg IGA is still under negotiation and the exact date for its signature remains to be defined. In an interview with Paperjam dated 7 February 2013, Minister Frieden felt that one could reasonably expect the Luxembourg IGA to be signed by the end of the third quarter of 2013 at the latest.
The negotiations relate essentially to the content of the so-called Annex II, which will list the Luxembourg entities and (financial) products that will be exempt from FATCA reporting. A generic text of Model I IGA, of which a reciprocal (so-called “Model IA”) and a non-reciprocal version (so-called “Model IB”) exist, can be found on the U.S. Treasury’s FATCA resource center.
By Camille Seillès, Legal & Tax Adviser - ABBL