The U.S. Department of the Treasury (Treasury) issued joint statements with the governments of Japan and Switzerland on June 21, 2012 outlining a new framework for foreign financial institutions (FFIs) in those countries to comply with the Foreign Account Tax Compliance Act (FATCA). This new framework is in addition to that introduced in the February 2012 joint statement released by the United States and five European governments. Other countries seeking to reduce some of FATCA’s burdens or impracticalities now have a choice between the February approach (Model I) and the newly announced approach (Model II).
FATCA does not require foreign governments to enter into either type of agreement described above, and the inter-governmental approach is not open to all countries. However, the Treasury has indicated that it is open to adopting either approach with countries willing to cooperate to achieve FATCA’s goals. The Treasury also has indicated that a country does not need to have an existing income tax treaty with the United States in order to enter into an inter-governmental FATCA agreement.
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