Belgium has finalized a tax information sharing agreement with the US as part of the Foreign Account Tax Compliance Act (FATCA). GPs and other foreign financial firms covered by the law have until May 5 to register with US tax authority the Internal Revenue Service ahead of the law’s July 1 go-live date.
Belgium signed what’s known as a “Model I” agreement with the US. The Model I has GPs report FATCA information to their local regulator who will in turn share that information with its US counterpart. In return, the IRS will collect and share data on Belgian account holders in the US.
The US government also agreed to treat three countries (Colombia, Bulgaria and Cyprus) which have reached Model I intergovernmental agreements “in substance” as completed for purposes of FATCA.
The news follows the US adding 20 other countries to its listed of completed IGAs despite the agreements not having been formally signed, which allows GPs in those countries to begin registering with the IRS. Many GPs covered by FATCA said they reached a roadblock in their compliance preparations because it was unclear whether they would be reporting to their local regulator or directly to the IRS.
Failure to report the holdings of US clients results in a 30 percent withholding tax on payments travelling out of the US.