After prolonged discussions the USA and Norway signed a bilateral FATCA agreement on April 15, 2013. This Norway FATCA is designed under Model I intergovernmental approach to implementing the Foreign Account Tax Compliance Act. American expatriates in Norway with past due tax returns and FBARs must realize the importance of these developments.
This Norway FATCA is the sixth IGA (Foreign Account Tax Compliance Act) agreement. Earlier the USA signed Model I agreements with the United Kingdom (September 2012), Denmark (November 2012), Ireland (December 2012), Mexico (November 2012). The IGA agreement signed with Switzerland is based on Model II. American expatriates living in Italy must be aware that the USA is finalizing the FATCA agreement with Italy.
What are the key features of the Norway FATCA agreement?
- The key difference of this intergovernmental agreement is “coordination of timing” rule in article 4. It implies that Norway doesn’t have any obligation to provide the information until the USA can collect and provide similar data. This FATCA provision is very important because it puts additional pressure on the USA to implement FATCA per the standards that are expected from foreign countries. Moreover, this rule will apply to the FATCA agreements with the countries that have the most favored nation clauses.
- Another key feature of Norway FATCA (Foreign Account Tax Compliance Act) is the seventh provision that was not a part of the Model I agreements signed earlier. Per this provision, Norway may allow its financial institutions to rely upon definitions in US Treasury regulations instead of the agreement.
- As with other FATCA agreements, the parties have agreed to notify each other in writing about the implementation process.
- Since the Norway FATCA is an intergovernmental agreement, the Norwegian financial institutions will not be required to report the financial information about US persons directly to the IRS. The USA will consider the Norwegian financial institutions to be compliant under the Norway FATCA agreement as long as Norway proceeds with establishing internal infrastructure and procedures to implement FATCA.
Which Norwegian financial institutions are exempt under the Norway FATCA agreement?
The list of deemed-compliant financial institutions of Annex II is quite short:
- Some Norwegian nonprofit organizations
- Small financial institutions with a local customer base
- Collective investment vehicles
- Property savings accounts for young people
- Two types of retirement accounts
Most American expatriates with past due tax returns live under the impression that the IRS will find them only if they have the US income. However, the FATCA changes the world. The information about delinquent American expatriates will be reported to the IRS in the nearest future by the countries who signed the FATCA agreements with the USA. There are several options for American expatriates to become compliant. The IRS streamlined program for delinquent American expatriates might be the best option for low-risk taxpayers. It is important to contact the expat tax CPA that provides international tax services. International tax experts at Artio Partners are here to help you.