Finance: The Grand Duchy plans to sign a FATCA agreement with Washington “soon”, even while America’s Republican Party has started a campaign to scrap the tax reporting rules.
The Grand Duchy is “close to concluding negotiations” with Washington over tax evasion rules and a deal could be ratified by the end of the year, even after America’s second largest political party has begun to campaign for its repeal.
Last week the Republican National Committee adopted a resolution to rescind FATCA, should it win a large enough majority in November’s congressional elections. It also plans to lobby foreign governments to not cooperate on FATCA’s data sharing provisions.
“Republicans Overseas plans to send the RNC resolution to repeal FATCA to all foreign embassies in” Washington, Solomon Yue, Jr. of the Oregon Republican Party, told Delano.
FATCA requires nearly every financial institution in the world to provide information to the IRS, the American tax office, on anyone with links to the US. Data can filed directly or via national agencies in countries that have signed an intergovernmental agreement (IGA).
“We want to send a ‘no need to rush to sign the intergovernmental agreements with the US Treasury’ message,” said Yue, who represents Oregon Republicans on the party’s national committee and who authored the resolution. “FATCA can’t be successfully implemented without a lot of countries signing such agreements.”
France, Germany, Japan, Switzerland and the UK are among the nations that have already concluded “FATCA partnership” accords with Washington. The Grand Duchy has been negotiating such a deal since last spring.
Luxembourg has “to be ready”
“We are close to concluding the negotiations for an intergovernmental agreement on FATCA,” a spokeswoman for Luxembourg’s finance ministry told Delano on Tuesday.
“If the FATCA… legislation were to be revoked by congress, any IGA could become senseless. But if the Republican effort to revoke FATCA fails, we need to have a FATCA IGA ratified by the Luxembourg parliament before the end of 2014. We thus have to pursue the IGA process to be ready for any scenario in late autumn,” she said.
The US treasury official told Delano last week that “pending the signing of an [intergovernmental agreement with the Grand Duchy], it would not be appropriate for us to comment on content or timing.”
Democrats Abroad, the overseas body of US president Barack Obama’s Democratic Party, has also come out against FATCA. A spokesman for the group’s Luxembourg branch said a task force has been lobbying the US congress to lighten the reporting requirements.
UPDATE: An earlier version of this article said Luxembourg’s FATCA agreement would be “signed” by “late autumn”. On Thursday the Grand Duchy’s finance ministry clarified that the signature is expected earlier than that and the measure would ideally be “ratified” by the Chamber of Deputies by late autumn.
The article also said that, should Republicans’ efforts to repeal FATCA be successful, the Grand Duchy’s IGA would become moot. The finance ministry clarified that all FATCA agreements around the world would be called into question, and not just the accord with Luxembourg, if FATCA were repealed.