Scanning Special June 2014

FATCA - Association of the Luxembourg Fund Industry (ALFI) publishes dedicated Q&A Background The IGA model 1 has been signed by Luxembourg on 28 March 2014 (the IGA). This agreement sets forth the rules applying to the automatic exchange of information between Luxembourg and the US tax authorities regarding assets held by US citi- zens and US residents with Luxembourg financial institutions. What’s in there? ALFI released its FATCA Q&A on 15 April 2014 (the Q&A). It is first composed of an introductory note describing the background of FATCA and focussing on the content of the IGA. The Q&A further deals with the FATCA status and registration require- ments applying to Luxembourg reporting FIs and non-reporting FIs. Within the section dedicated to due diligence requirements, the Q&A lays down the de minimis rule under which no account's holder identification is required and the due dili- gence rules to be complied with in respect of new and pre-existing account holders. Sections regard- ing reporting and withholding obligations will be added later. What’s next? The IGA shall be made into Luxembourg law within the next months. FATCA withholding on US sourced income will start on 1 July 2014 and FIs need to update their investor/client on-boarding procedures before that date.

FATCA – Extension to FFI registration period Background As part of the effort to facilitate an effective start of FATCA on July 1, 2014, the IRS has announced in its 2014-17 announcement that deadline for FFI registration with the IRS to be on the first IRS FFI list has been delayed to 5 May 2014 (instead of 25 April 2014). Furthermore, entities which register by 2 June 2014 will be included in the updated IRS FFI list published beginning of July 2014. What’s in there? Beside the list of IGA countries, the IRS US De- partment of Treasury published on its website the list of countries currently in an advanced stage of negotiation with the IRS. The investors based in these countries, even in the absence of signed IGA, may be considered as "good investors" resident in country having an IGA in place. The list includes 20 countries among which Belgium, British Virgin Islands and Liechtenstein; more countries are ex- pected to follow. What’s next? Despite the fact that entities can register with the IRS by 3 June 2014 in order to be on the IRS FI list published on 1 July 2014, we have observed that big players stick to the 5 May deadline for reg- istration to be on the first IRS FFI list, which will be published on 2 June 2014. The IRS FFI list will include all FI registered and will be updated on an ongoing basis. New FATCA-like system to combat tax evasion in Europe - Implementation in Luxemboutg Background The USA already took unilateral actions and enact- ed the FATCA regime (2010) to combat tax evasion ; regime that appeared to be attractive to many other jurisdictions which want now to replicate it. The US FATCA has been an icebreaker to extend THE IRS ANNOUNCEMENT IS AVAILABLE HERE

Both IGAs are Model I reciprocal agreements, mean- ing that financial institutions in each country will re- port specific information to their own governments, which will then automatically exchange that infor- mation annually on a reciprocal basis. One of the specific features of the Luxembourg IGA is that the category of "Restricted Funds", which was considered too burdensome by the industry, may become more attractive for Luxembourg funds. In addition, having issued physical shares in bearer form until 31 March 2013 (instead of 31 December 2012 for most other IGAs) does not jeopardise the deemed-compliant status of Luxembourg funds. What’s next? As from 30 September 2015 the IGAs will be op- erative. By 30 September 2015 at the latest, tax authorities have to transmit information relating to 2014 to the US tax authorities. In this context two working groups bringing together different actors from the public and private sectors were set up by the Luxembourg tax authorities. First one will be in charge of the general questions about the implementation of the project while the other will deal with the technical and electronic issues. The Luxembourg agreement contains provisions on the automatic exchange of information between Luxembourg's tax authorities and the US's, on assets owned by US citizens and residents and entrusted to Luxembourg's financial institutions. The piece of legislation will be published on the Min- ister of Finance's website in early April 2014. The provisions of the Belgian IGA will now also need to be implemented into national Belgian laws with a view on the entry into force of FATCA on 1 July 2014. Important to note also is that Belgian FFIs should in principle register on the portal of the IRS before 3 June in order to be included on the first IRS FFI list.

THE PRESS RELEASE REGARDING LUXEMBOURG IS AVAILABLE HERE.

THE ALFI Q&A IS AVAILABLE HERE.

THE BELGIAN IGA IS AVAILABLE HERE

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