On November 14, the United States has signed an intergovernmental agreement with France to implement the Foreign Account Tax Compliance Act (FATCA), which was included as part of the HIRE Act of 2010, requiring foreign financial institutions, including hedge funds, to report on the holdings of US taxpayers to the Internal Revenue Service, or else face stiff penalties.
The agreement was signed today by U.S. Ambassador to France Charles H. Rivkin and French Finance Minister Pierre Moscovici.
“The signing of this agreement marks an important step forward in the collaboration between the United States and France to combat tax evasion,” said Ambassador Rivkin.
“France has been an enthusiastic supporter of our effort to promote global tax transparency and critical to drafting a model of FATCA implementation,” said US Deputy Assistant Secretary for International Tax Affairs Robert B. Stack. “This agreement demonstrates the growing global momentum behind FATCA and strong support from the world’s most important economies.”
FATCA requires U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) who do not agree to identify and report information on U.S. account holders. The IGA between the United States and France is the Model 1A version, meaning that FFIs in France will be required to report tax information about U.S. account holders directly to the French government, which will in turn relay that information to the IRS. The IRS will reciprocate with similar information about French account holders.