FATCA IGAs: Where Are We Now?

In November, Treasury announced that it was engaged with more than 50 countries and jurisdictions to improve international tax compliance and implement FATCA. Most of those countries (48) were identified in a November 8, 2012 Treasury press release. In April, in a “Treasury Notes” blog article, a Treasury official updated the number of jurisdictions with which the U.S. is actively working (now 75) but most of the additional countries/jurisdictions were not named.

To date, the U.S. has concluded bilateral intergovernmental agreements (IGAs) with six countries:  1) the United Kingdom (signed Sept. 14, 2012);  2) Denmark (signed Nov. 15, 2012);  3) Mexico (signed Nov. 19, 2012);  4) Ireland (signed Dec. 21, 2012);  5) Switzerland (signed Feb. 14, 2013); and  6) Norway (signed April 15, 2013). Of these, only the IGA with Mexico has, by its terms, entered into force.

The bilateral IGAs are each based on one of three model agreements drafted by Treasury: 1) Model 1A (reciprocal); 2) Model 1B (non-reciprocal); and 3) Model 2. Five of the six bilateral IGAs are based on Model 1A (reciprocal) with the U.S.-Switzerland IGA as the only one, so far, to follow Model 2. While the expressed intent was for the bilateral IGAs to conform closely to the model selected, with an understanding that negotiations would allow for customization in Annex II of each IGA, variations in the article text of some bilaterals has been noted both between a particular bilateral and the model text and between concluded bilaterals.

In the case of the recent IGA with Norway, we see a more pronounced departure from staying within the confines of a model. While the bilateral with Norway adopts Model 1A, for the first time, the text of the IGA has been supplemented by a separate MOU, signed on the same date as the IGA (although Treasury has posted the US-Norway IGA, at the time of this writing, the MOU was not available on Treasury’s website; both texts are, however, available on Norway’s Ministry of Finance website). Will this be the new approach–select a model and if your concern isn’t adequately addressed, include a supplementary instrument? Can we expect other signatories to reopen negotiations to amend their IGAs now?