Ireland signs FATCA agreement

Ireland and the US have signed an intergovernmental agreement (IGA) in a bid to ensure that Irish financial institutions will be ready to comply with the US Foreign Account Tax Compliance Act (FATCA).

FATCA requires foreign financial institutions (FFIs), which include non-US private equity firms with US investors, to enter into a reporting relationship with US tax authorities or face a hefty 30 percent withholding tax on certain payments travelling outside the US.

Signed in late December, the agreement allows for the automatic reporting and exchange of information in relation to accounts held in Irish financial institutions by US persons, and the reciprocal exchange of information regarding US financial accounts held by Irish residents. 

“This IGA strongly mirrors that signed by the UK last September,” said Andrew Quinn, Dublin based head of tax at Maples and Calder. He added that “Ireland wanted to get this signed early to give certainty to the country’s international financial services sector and help it comply with FATCA in an administratively straightforward way”.

Quinn expects further guidance and implementing legislation to be contained within a finance bill due later this month. 

With the agreement Ireland has joined a club of countries including the UK, Mexico and Denmark to have signed IGAs with the US. More IGAs are expected shortly as the US is in talks with more than 50 countries, and many of these are reportedly at advanced stages.