Liechtenstein has signed an intergovernmental agreement (IGA) with the United States as part of its efforts to improve international tax compliance and to implement Foreign Account Tax Compliance Act (FATCA).
The agreement was signed on 16 May 2014 by Liechtenstein prime minister Adrian Haslet and the United States chargé d’affaires to Liechtenstein, Jeffrey R. Cellars in Vaduz.
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The IGA will requires banks in the principality to provide information about accounts held abroad by US taxpayers to US tax authorities.
Under the agreement, the Liechtenstein banks and other financial institutions will have access to US capital markets.
The IGA will also simplify FATCA implementation and will guarantee legal certainty for Liechtenstein foreign financial institutions (FFIs).
As per the FATCA law, failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement to withhold 30% tax on payments of US-sourced income.
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By GlobalDataThe Liechtenstein Government said that it plans to submit legislation to implement FATCA in the course of this year and added that the agreement was made in the best interests of the Government.
Additionally, the implementation of FATCA is associated with notable administrative and financial efforts for the financial institutions.
Adrian Hasler said: "The Liechtenstein Financial Centre is characterized by high-quality services for an international and sophisticated clientele. The unhampered access to U.S. capital markets, which has been secured by the agreement, is essential for Liechtenstein providers of financial services."
