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On January 28, Slovenia's Ministry of Finance announced that Slovenia and the United States had initialed the text of a bilateral inter-governmental agreement (IGA) for the implementation of the Foreign Account Tax Compliance Act (FATCA).
FATCA, enacted by the US Congress in 2010 and, taking effect on July 1, 2014, is intended to ensure that the US obtains information on accounts held abroad at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
To address situations where foreign law would prevent an FFI from complying with the terms of an FFI agreement, Treasury has developed model IGAs.
Under the terms of the Model 1 IGA between Slovenia and the US, Slovenian FFIs will be required to report their information to the Slovenian tax authorities, which will then automatically exchange the information with the US Internal Revenue Service. The automatic exchange of information will be reciprocal, and data will also be available on accounts held in the US by Slovenian residents.
The agreement will need to be further discussed by the Slovenian Government, and then signed, before the process of its ratification by the National Assembly can begin.
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