A statement issued by the Irish Funds Industry Association today said the Irish Revenue Commissioners had “confirmed that they are in contact with the US Treasury, and discussions are ongoing”, and that “any agreed approach would be based on domestic tax reporting legislation and automatic exchange of information under existing bilateral tax treaties”.
News of Ireland’s willingness to enter into an intergovernmental deal, or what some call a “FATCA partnership”, is seen as significant in view of its large funds management industry.
According to the IFIA, Ireland experienced the highest net inflows of UCITS of all fund domiciles in 2011, attracting some €62bn, or, it said, nearly €50bn more than the next most successful domicile, and saw total inflows grow by 8%.
In its statement today, the IFIA said it understood the approach being explored by Ireland involved the development of “a model global agreement, which will be adopted under relevant bilateral tax treaties/exchange of information agreements”.
Such a model agreement, it said, would “not alter or amend the obligation to identify or report certain information under FATCA, but will outline an alternative pathway for reporting FATCA information”.
The model agreement is expected by the end of June 2012, the IFIA noted.
Intergovernmental framework unveiled
As reported, the US and five European countries announced in February that they had agreed on an intergovernmental agreement, whereby financial institutions in these countries would forward the data on American account-holders sought by the US tax authorities – via the new FATCA rules – to the governments of the respective countries in which their accounts are held. The five countries are the UK, France, Germany, Ireland and Italy.
These governments then would forward the necessary data to the Internal Revenue Service, thus avoiding the potentially problematic need for the financial institutions to enter into a reporting relationship themselves with the IRS.
The deal was unveiled on 8 February, as the US released a keenly awaited set of draft regulations for the implementation of FATCA, which is due to begin taking effect on 1 Jan 2013.
At the time the intergovernmental deal between the US and the five European countries was unveiled, the US Treasury told journalists that they were open to agreeing similar deals with other countries. Since that time a number of jurisdictions, including Guernsey and Israel, have been revealed to be considering such arrangements.
IFIA chairman Ken Owens said that the fact intergovernmental arrangements are likely to be based on a model agreement was “welcome news for an industry which operates on a multi-jurisdictional basis”, as it would mean information exchanges would occur “on a consistent basis, rather than under individual agreements which might be operated on a disjointed basis”.
IFIA spokeswoman Angela Madden added that Ireland was expected to benefit from the global move towards more regulation – of which FATCA is an example – due to its existing network of tax treaties and double-taxation agreements, its own, existing regulatory infrastructure, and its “regulation-ready product solutions”.
