Liechtenstein and the United States Sign Foreign Account Tax Compliance Act Agreement
Prime Minister Adrian Hasler and the U.S. Chargé d’Affaires to Liechtenstein, Jeffrey R. Cellars signed an agreement to implement the provisions of the Foreign Account Tax Compliance Act (FATCA) on May 16, 2014. With this, access to the U.S. capital market for Liechtenstein Financial Institutions is ensured.
From Left: U.S. Chargé d’Affaires to Liechtenstein, Jeffrey R. Cellars and Prime Minister Adrian Hasler.
In the course of the negotiations, which were in essence completed by the end of 2013, an agreement was reached regarding important issues for Liechtenstein Financial Institutions and in the best interest of Liechtenstein.
With FATCA, the U.S. is aiming to ensure that all accounts of individuals who are taxable in the U.S. which are held abroad are reported. FATCA is a unilateral U.S. legislation with worldwide applicability. Foreign Financial Institutions are obliged to pass information on U.S. accounts to the U.S. Tax Authorities (Internal Revenue Services, IRS) or be subject to a substantial withholding penalty.
Agreement ensures access to U.S. capital market
“The Liechtenstein Financial Center is characterized by high-quality services for an international and sophisticated clientele,” said Prime Minister Adrian Hasler at the signing in Vaduz. “The unhampered access to U.S. capital markets, which has been secured by the agreement, is essential for Liechtenstein providers of financial services.”
Facilitation and legal certainty achieved
Liechtenstein has, in coordination with the associations of the financial center, decided to conclude a so-called Intergovernmental Agreement (IGA). The implementation of FATCA is associated with notable administrative and financial efforts for the financial institutions. These efforts are reduced with the FATCA Agreement, due to the fact that the agreement implements administrative facilitations and brings clarity regarding the treatment of financial institutions and their products.
Competent Authorities to exchange information
The provisions of the agreement provide for the automatic exchange of information concerning assets held by U.S.-Persons at Liechtenstein financial institutions to be exchanged by the tax authorities of the two countries.
To implement FATCA, the Liechtenstein Government plans to submit legislation to the Liechtenstein Parliament in the course of this year.