The document compares key aspects of FATCA regulations, Model 1 IGA, and Model 2 IGA. Some key differences include:
- Under FATCA, FFI agreements and registration with the IRS are required for all FFIs, while under Model 1 and 2 IGAs this is only required for resident FFIs.
- Model 1 and 2 IGAs allow for resolution of conflicts of laws to permit reporting and withholding, while FATCA does not address this.
- Withholding under FATCA generally applies more broadly to non-participating FFIs and account holders, while Model 1 and 2 IGAs limit withholding to cases of significant non-compliance.
- Model 1 IGAs provide for
The document compares key aspects of FATCA regulations, Model 1 IGA, and Model 2 IGA. Some key differences include:
- Under FATCA, FFI agreements and registration with the IRS are required for all FFIs, while under Model 1 and 2 IGAs this is only required for resident FFIs.
- Model 1 and 2 IGAs allow for resolution of conflicts of laws to permit reporting and withholding, while FATCA does not address this.
- Withholding under FATCA generally applies more broadly to non-participating FFIs and account holders, while Model 1 and 2 IGAs limit withholding to cases of significant non-compliance.
- Model 1 IGAs provide for
The document compares key aspects of FATCA regulations, Model 1 IGA, and Model 2 IGA. Some key differences include:
- Under FATCA, FFI agreements and registration with the IRS are required for all FFIs, while under Model 1 and 2 IGAs this is only required for resident FFIs.
- Model 1 and 2 IGAs allow for resolution of conflicts of laws to permit reporting and withholding, while FATCA does not address this.
- Withholding under FATCA generally applies more broadly to non-participating FFIs and account holders, while Model 1 and 2 IGAs limit withholding to cases of significant non-compliance.
- Model 1 IGAs provide for
The document compares key aspects of FATCA regulations, Model 1 IGA, and Model 2 IGA. Some key differences include:
- Under FATCA, FFI agreements and registration with the IRS are required for all FFIs, while under Model 1 and 2 IGAs this is only required for resident FFIs.
- Model 1 and 2 IGAs allow for resolution of conflicts of laws to permit reporting and withholding, while FATCA does not address this.
- Withholding under FATCA generally applies more broadly to non-participating FFIs and account holders, while Model 1 and 2 IGAs limit withholding to cases of significant non-compliance.
- Model 1 IGAs provide for
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Comparison of FATCA vs IGA Model 1 & Model 2
Issue FATCA Regulations Model 1 IGA Model 2 IGA
FFI agreement Subject to specified exceptions, Not required for resident FFIs. Resident FFIs must agree to all FFIs must enter into an FFI comply with the requirements of Agreement to avoid withholding. an FFI Agreement. Article 2(a). Requirement to withhold, on payments to FFIs, see Reg. §1.1471-2(a). FFI Agreement described, Reg. §1.1471-4. Amendment of agreement Unknown. Intended prior to December 31, Expected to be the same as 2016. Article 10. Model 1. Registration with IRS Required. Reg. §1.1471-4(a). Required. See, e.g., HMRC Required. Article 2(1)(a). Guidance Notes, Section 2.1. Enforcement of compliance Internal compliance program; Local/IRS. Article 5. Local/IRS. Article 4. certifications; IRS. Reg. §1.1471- 4(f). Significant non-compliance Rules provided to cure event of Must be resolved within 18 Must be resolved within 12 default. Reg. §1.1471-4(g). months. Article 5(2)(b). months. Article 4(2). Deemed-compliant/exempt Reg. §§1.1471-5(e)(5), -5(f), -6; Annex I(VI)(B)(4), and Annex II Annex I(VI)(B)(4), and Annex II entities Reg. §1.1472-1(c). (by mutual Agreement). (by mutual Agreement). Can resident FFIs be non- Yes Limited to cases of unresolved Limited to cases of unresolved participating FFIs? significant non-compliance. significant non-compliance. Article 5(2)(b). Article 4(2). Due diligence requirements Reg. §1.1471-4(c). Annex I Annex I Election to follow due diligence N/A Yes. Annex I(I)(C). Yes. Binding subject to material provisions of the regulations modification rule. Annex I(I)(C). rather than Annex I Issue FATCA Regulations Model 1 IGA Model 2 IGA Permitted to open undocumented Yes, but subject to a limited No, except for de minimis No, except for de minimis individual accounts cure period. Reg. §1.1471-5(g) accounts. Annex I(III)(B). accounts. Annex I(III)(B). (ii). Permitted to open undocumented Yes, but subject to a limited No; however, self-certification No; however, self-certification entity accounts cure period. Reg. §1.1471-4(c) may not be required. Annex I(V) may not be required. Annex I(V) (3)(ii). (B), (C). (B), (C). Required closing of recalcitrant Yes, as specified. Reg. No. Article 4(2). No. Article 4(2)(a). account holders §1.1471-4(i). Required reduction. Reg. §1.1471-4(g) (1)(ii). Required to provide financial Limited to certain deemed- Limited to small financial Limited to small financial services to specified U.S. compliant FFIs. institutions with a local client institutions with a local client persons Reg. §1.1471-5(f)(1)(i)(A). base. Annex II. base. Annex II. Resolution of conflicts of law to No Yes Yes permit reporting Reporting of information to local IRS, Form 8966: U.S. Local Authority, Article 2. IRS, Article 2. authority or IRS accounts, Reg. §1.1471-4(d) (3)(vii); recalcitrant, Reg. §1.1471-4(d)(6)(v). Information reporting Provided in Reg. §1.1471-4(d). Specified in agreement. Article Based upon regulations. Article requirements 2. 2. Reporting of U.S. accounts Waiver required from each Automatic for reportable U.S. Consent to report required from U.S. account, if reporting is accounts. Article 2(1). each US Account. Article 2(1). prevented under foreign law. Reg. §1.1471-4(i)(2). Reporting of recalcitrant Reg. §1.1471-4(d)(6). Automatic for reportable U.S. Treated as U.S. accountholders accounts. Article 2(1). accountholders, total number and value to be reported, and subject to group request by U.S. Article 2(2). Issue FATCA Regulations Model 1 IGA Model 2 IGA U.S. reciprocity No Yes* Reciprocal agreement Optional only. Resolution of conflicts of law No Yes. See, e.g., Article 4(1)(d). Yes. See, e.g., Article 3(2)(b). to permit withholding Withholding on resident FFIs Yes, withholding applies to any No, except in cases of No, except in cases of non-participating FFI. Reg. unresolved significant non- unresolved significant non- §1.1471-4(b). compliance. Article 4. compliance. Article 3(1). Withholding on nonresident, Yes, withholding applies to any Yes. Article 4(1). Yes, subject to the withholding non-participating FFIs non-participating FFI. Reg. requirements of the regulations. §1.1471-4(b). Article 2(1)(a). Withholding on foreign Yes, 2017 at the earliest. Reg. No. Article 4. No. Article 3. passthru payments and gross §1.1471-4(b)(4). sales proceeds Withholding on U.S.-source Yes, begins in 2014, Reg. No. Article 4. No. Article 3. FDAP §1.1471-4(b). Withholding on recalcitrant Yes. Reg. §1.1471-4(b). No. Article 4(2). No. Article 3(2). account holders