The intergovernmental agreement (IGA) was signed last week in Vaduz by Liechtenstein prime minister Adrian Haslet and the United States chargé d’affaires to Liechtenstein, Jeffrey R. Cellars.
The agreement assures that financial institutions in Liechtenstein have access to the US capital market once the US Foreign Account Tax Compliance Act has been implemented.
Hasler said: “The unhampered access to US capital markets, which has been ensured by the agreement, is essential for Liechtenstein providers of financial services.”
The Liechtenstein Government said the agreement was made in the “best interests” of the Government.
It added that it plans to submit legislation to implement FATCA in the “course of this year”.
FATCA is part of the US Hiring Incentives to Restore Employment Act. It ensures that US persons, wherever they are located and in whatever investment vehicle they hold their assets, are paying the correct amount of US tax.
It requires foreign financial institutions to report information to the Internal Revenue Service about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.
When the act comes into force, those who are not compliant will suffer a 30% withholding tax on income and gross proceeds.
An IGA makes it easier for partner countries to comply with the provisions under FATCA. The benefits of an IGA include the relaxation of deadlines and increased clarity and simplicity around due diligence with country specific provisions.
For a comparison between the IGA model 1 and 2 click here.
Last week, Gibraltar signed an intergovernmental agreement (IGA) with the United States.
The British overseas territory’s government said the signing followed “consultation with the industry” and a review of the views of a working group set up specifically to consider FATCA and its impact on the financial services sector.
It said the agreement aims to improve international tax compliance through mutual assistance in tax matters based on an “effective infrastructure for the automatic exchange of information”.
