Experience. Dedication. Results.

Photo of Professionals at Law Office of Williams & Associates, P.C.

United States Signs Bilateral Agreement with Denmark to Implement FATCA

On Behalf of | Nov 21, 2012 | Uncategorized |

On November 15, 2012, the United States and Denmark signed a reciprocal bilateral agreement and memorandum of understanding laying out a cooperative governmental approach to implementing the Foreign Account Tax Compliance Act (FATCA). This is only the second such agreement signed by the United States; the first was signed with the United Kingdom earlier this year.

The agreement with Denmark is based on the Reciprocal Model 1 Template released by the United States Treasury in July 2012. The agreement takes effect as of the later of Jan. 1, 2013 or the date on which both parties have notified the other in writing that the necessary internal procedures to prepare for the enforcement of the agreement are complete.

The annexes contained in the agreement list exactly who or what individuals or entities will qualify as exempt beneficial owners, deemed-compliant financial institutions, nonparticipating institutions and exempt products.

An example of a deemed-compliant financial institution is: a small Danish financial institution with a local client base, no fixed place of business outside of Denmark and who does not solicit account holders outside of Denmark. In addition, certain collective investment vehicles, nonprofit organizations and housing cooperatives are also deemed-compliant.

This agreement is similar to the agreement the United States signed with the United Kingdom, but it also contains three features not included in the Reciprocal Model 1 Template:

1. A “most favored nation” provision extending to Denmark any more favorable future terms the U.S. may enter into with another jurisdiction.

2. Consultation between the two nations in the event that any conflicts may arise during the implementation of the agreement.

3. Under Article 9, a provision that all annexes are an integral part of the agreement.

To read the agreement, click here.

Archives

FindLaw Network