FATCA - Entry into force

The intergovernmental agreement (“IGA”), its annexes and the “Memorandum of Understanding”, all signed on March 28th 2014 between the US and Luxembourg as regards FATCA was voted by Parliament on July 1st 2015 and was promulgated as Luxembourg law of July 24th 2015 (the “Law”). With the exchange of diplomatic notes between the government of Luxembourg and the United States on March 31st 2015, article 10 of the IGA has been amended and the ratification of the Double Tax Treaty protocol by the United States as a condition for the entry into force of the IGA has been abolished.

"Therefore, Luxembourg has completed the necessary internal procedures and the IGA effectively entered into force on July 29th 2015."

As a consequence, Luxembourg financial institutions are now obliged to provide the information as defined in the IGA by June 30th following the year to which the information relates. For 2015 the reporting deadline was postponed twice by the Luxembourg tax authorities to finally be set at August 31st 2015. The information received by the Luxembourg Tax Authorities was due to be exchanged with the IRS by September 30th 2015.

In addition to the Law, the Luxembourg Tax Authorities issued the final versions of the Circular Letters ECHA 2 and ECHA 3 on July 31st 2015 (the “Circular Letters”). Circular letter ECHA 2 provides more detailed guidance as to which Luxembourg institution and which accounts are within the scope of the IGA, what due diligence procedures need to be followed and to what extent the exchange of information takes place. Circular letter ECHA 3 deals with the technical aspects and the form which the Luxembourg financial institutions need to comply with for the exchange of information under FATCA.