Luxembourg: Luxembourg signs FATCA agreement with the US

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Luxembourg: Luxembourg signs FATCA agreement with the US

merle.jpg

Samantha Merle

Having agreed on its content by the end of February, Luxembourg and the US signed an intergovernmental agreement (IGA) implementing the Foreign Account Tax Compliance Act (FATCA) on March 28. Luxembourg and the US negotiated a Model 1 IGA, requiring the Luxembourg tax authorities and the US Internal Revenue Service (IRS) to exchange information automatically on accounts held by US citizens and by persons resident in the US in financial institutions resident in Luxembourg. The IGA is reciprocal, which means the US will also have to report account information about Luxembourg individuals and entities in the US to the Luxembourg tax authorities. The IGA will enter into force either on the date of Luxembourg's written notification to the US that Luxembourg has completed its necessary internal procedures for the entry into force of the IGA, or on the date of the US written notification to Luxembourg that its applicable procedures for ratification of the amending protocol to the 1996 income tax treaty, signed on May 20 2009, have been satisfied, whichever date comes last.

To date, most of the agreements concluded by the US are Model 1 IGAs. Under the Model 1 IGA, the information transits from the foreign financial institution to the IRS via its domestic authorities whereas the Model 2 IGA provides for a direct communication of the information from the foreign financial institution to the IRS and implies the adoption into domestic law of the extensive and complex Final Regulations. In May 2013 Luxembourg announced that a Model 1 would be chosen for the adoption of an IGA.

Following the signature of the IGA, the Luxembourg tax authorities released a newsletter which announces the practical modalities of information exchange under FATCA. The tax authorities have put in place two working groups including different actors from the public and private sectors who will work together on the implementation of automatic exchange of information under the IGA. While the first working group will have to deal with general implementation issues, the second working group will address more practical and technical issues regarding electronic communication of information between the reporting financial institutions and the tax authorities. In a next step, the Luxembourg tax authorities will provide some more detailed information in circulars to be released.

Samantha Merle (samantha.merle@atoz.lu)

ATOZ – Taxand

Tel: +352 26 940 235

Website: www.atoz.lu

more across site & shared bottom lb ros

More from across our site

In the age of borderless commerce, money flows faster than regulation. While digital platforms cross oceans in milliseconds, tax authorities often lag. Indonesia has decided it can wait no longer
The tariffs are disrupting global supply chains and creating a lot of uncertainty, tax expert Miguel Medeiros told ITR’s European Transfer Pricing Forum
Corporate counsel should combine deep technical knowledge with strategic dynamism, says Agarwal, winner of ITR’s EMEA In-house Indirect Tax Leader of the Year award
Luxembourg’s reform agenda continues at pace in 2025, with targeted measures for start-ups and alternative investment funds
Veteran Elizabeth Arrendale will lead the new advisory practice, which will support clients with M&A tax structuring, post-deal integration, and more
MAP cases keep increasing, and cases closed aren’t keeping pace with the number started, the OECD’s Sriram Govind also told an ITR summit
Nobody likes paperwork or paying money, but the assertion that legal accreditation doesn’t offer value to firms and clients alike is false
Ryan hopes the buyout will help it expand into Asia and the Middle East; in other news, three German finance ministers have called for a suspension of pillar two
SKAT, which was represented by Pinsent Masons, had accused Sanjay Shah and other defendants of fraudulent dividend tax refund claims
TP managers must be able to explain technical issues in simple terms, ITR’s European Transfer Pricing Forum heard
Gift this article