Liechtenstein, US Sign FATCA Deal
Liechtenstein and the US have signed an intergovernmental agreement (IGA) for the implementation of the US Foreign Account Tax Compliance Act (FATCA), the Liechtenstein Government has announced.
The IGA requires the Liechtenstein Tax Administration and the US Internal Revenue Service (IRS) to exchange information automatically on accounts held by US taxpayers in foreign financial institutions (FFIs) in Liechtenstein, and vice versa. Failure of an FFI to submit information could result in a 30 percent withholding tax being levied on US source payments, and may result in the potential loss of corresponding banking relationships.
The accord will simplify FATCA implementation and will guarantee legal certainty for Liechtenstein FFIs. Liechtenstein’s Prime Minister, Adrian Hasler, emphasized that the “unhampered access to US capital markets, which has been secured by the agreement, is essential for Liechtenstein providers of financial services.”
The Liechtenstein Government will submit the IGA to Parliament during the course of this year. The agreement is a Model One IGA, which includes a number of concessions compared with a Model Two IGA, in recognition of Liechtenstein’s commitment to transparently exchange tax information, with the territory’s prior secrecy laws having been lifted.