Following an announcement in early December 2012 by the Irish Minister for Finance, Michael Noonan, that negotiations with the US regarding an intergovernmental agreement between Ireland and the US to facilitate the implementation of the US Foreign Account Tax Compliance Act ("FATCA") had been successfully concluded, the relevant agreement (the "Irish IGA") was signed on 21 December 2012.
The Irish IGA closely follows the Model I form of intergovernmental agreement, as initially released by the US Treasury in late July 2012. This form of agreement provides for reciprocal information exchange between the relevant countries and enables financial institutions in Ireland, in this case, to comply with FATCA by collecting and providing the required information directly to the Irish Revenue (rather than to the IRS). Compliance will enable financial institutions to thereby avoid the potential requirement for withholding tax to be levied on US sourced payments to them. Ireland already has an existing tax treaty with the US so this agreement bolsters the existing co-operation arrangements.
While generally following the standard Model I agreement, there are some updates to the template document. For example, the Irish IGA does include the provisions contained in Article 7 of the UK Intergovernmental Agreement with the US, signed in September 2012, providing that the benefit of any more favourable terms subsequently granted in later agreements with other countries will also accrue to Irish financial institutions. It will be of particular interest for those in the funds management industry to note that Collective Investment Vehicles are specifically addressed in the Annex II provisions.
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