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FATCA Intergovernmental Agreements—The Model 2 Agreement and Final Regulations  

Author:  Paul M.  Schmidt.; Michael W.  Nydegger .

Source: Volume 30, Number 03, Spring 2013 , pp.19-34(16)

Journal of Taxation of Investments

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Treasury’s release of the FATCA Final Regulations confirms that intergovernmental agreements (IGAs) are the preferred method for foreign financial institutions (FFIs) to be regulated under FATCA. IGAs provide a significantly simplified regulatory regime for FATCA implementation when compared to the 543-page Final Regulations. It is apparent in the Model 2 IGA and the revised Model 1 IGA that IGAs are evolving, incorporating changes as Treasury identifies problems in FATCA implementation. In addition, the IGAs that have been executed thus far contain numerous variances from the Model and each other. The inconsistencies between IGAsmay create challenges for multinationals with FFIs in different jurisdictions. These complexities are magnified for multinationals operating under both the Final Regulations and different IGAs, as different rules may be applicable for each member of the multinational group. On balance, however, the IGAs provide guidance and relief tailored to each IGA partner country’s regulatory regime, which appears preferable to operating under the Final Regulations.

Keywords: Model 2 IGA, IGAS, FATCA Final Regulations, FATCA withholding, intergovernmental agreements, reporting and information exchange

Affiliations:  1: Baker & Hostetler LLP ; 2: Baker & Hostetler LLP .

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