Intergovernmental Agreement


Information is accurate as of 16/07/14.

Intergovernmental Agreement Model 1

In July 2012, the U.S. Treasury Department issued the first model for an Intergovernmental Agreement (IGA) which makes it easier for partner countries to comply with the provisions of FATCA. The IGA provides for a partnership agreement between the U.S. and a FATCA Partnership jurisdiction, namely France, Germany, Italy and Spain with the United Kingdom first to sign the IGA agreement. Under this agreement, FFIs in partner jurisdictions will be able to report information on U.S. account holders directly to their national tax authorities, who in turn will report to the IRS. IGA highlights and benefits

  • Relaxation of deadlines
  • Simplified due diligence
  • Increased clarity around due diligence with country specific provisions

Annex II of the Model 1 IGA includes a country-specific list of financial institutions, products and accounts that are exempt or deemed compliant, thus reducing some of the remediation work for FFIs.

  • Reduced withholding requirements
  • Increased clarity around insurers
  • Clearer definitions with respect to pension annuities and more favorable rules applicable to new insurance contracts.

Intergovernmental Agreement Model 2

On November 15, 2012, the U.S. Treasury Department issued the second model of the Intergovernmental Agreement (IGA) for complying with the FATCA provisions. The model 2 IGA reflects the framework that was described in the joint statements by U.S. and Switzerland and U.S. and Japan earlier in the year. Model 2 IGA was designed to address potential conflicts of national and local laws that would make it difficult, for Financial Institutions in some jurisdictions, to comply with FATCA. The most notable differences between Model 1 and Model 2 IGA’s,

  • In Model 2, financial institutions will report information directly to the IRS rather than their local jurisdictions
  • There is no ‘reciprocal’ version of the Model 2 IGA.