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Crown Dependencies To Strike FATCA Deals With US

by Jason Gorringe,, London

10 October 2012

The governments of Guernsey, Jersey and the Isle of Man have simultaneously announced that they are seeking to negotiate partnership agreements with the United States to implement the Foreign Account Tax Compliance Act (FATCA).

The intention is that the three British Crown Dependencies will negotiate their own individual agreements which will follow the model intergovernmental agreement published by the US government on July 26 and will be similar in form to the agreement between the United Kingdom and the US signed on September 12.

Fiona Le Poidevin, Chief Executive of Guernsey Finance – the promotional agency for the Island’s finance industry internationally, said:

“We welcome today’s announcement that the Guernsey government will be looking to negotiate its own partnership agreement with the US to implement FATCA and that this will be along the lines of the ‘Model I’ type agreement that the UK has signed with the USA."

“The financial services industry in Guernsey has been busy getting up to speed with FATCA. This announcement will be very well received by industry because it provides certainty for the future. That said, there is still much work to be done by those firms in preparation for FATCA and we will also have to wait to see the final form of the agreement which is reached between Guernsey and the US.

“Overall though this is a very positive step. It is also encouraging to see that the three Crown Dependencies are taking a common approach, which will also be welcomed by much of the industry and especially those who have offices in two or more of the islands.”

A statement from the Guernsey Government said that discussions have taken place at official level between the Crown Dependencies jointly and the US government, and formal negotiations will now take place with the intention of concluding intergovernmental agreements rapidly.

Once signed, they will be subject to ratification by each of the island parliaments and implementation of the agreements will be through the domestic procedures relevant to each of the three jurisdictions.

Guernsey’s Chief Minister, Deputy Peter Harwood, said:

“Basing FATCA implementation on an intergovernmental agreement is preferred by industry in all three Crown Dependencies. We are pleased to confirm our joint intention to follow this approach with the US government. This announcement today provides certainty for our business community as they also prepare for FATCA."

“Entering into this type of arrangement highlights the cooperative approach of the Crown Dependencies to international tax matters and confirms Guernsey's commitment to being a well-regulated, internationally co-operative tax transparent jurisdiction. I am particularly pleased that the three Crown Dependencies have worked together and adopted a common position on this issue.”

Enacted by Congress in March 2010, FATCA’s provisions are intended to ensure that the US tax authorities obtain information on financial accounts held by US taxpayers with foreign financial institutions (FFIs). Failure by an FFI to disclose information would result in a requirement to withhold 30% tax on US-source income.

FFIs with US clients will be required to report basic account details for 2013 and 2014 by January 1, 2015, but it is currently envisaged that the income of those clients will not need to be reported until January 1, 2016, with respect to calendar year 2015.

TAGS: Isle of Man | Finance | tax | offshore confidentiality | banking | Guernsey | Jersey | United Kingdom | offshore | agreements | offshore banking | banking secrecy | withholding tax | United States | services

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