On June 27, 2024, the U.S. and Switzerland signed a new FATCA agreement changing Switzerland from a Model 2 IGA jurisdiction to Model 1 IGA jurisdiction starting in 2027.
Model 2 IGA
The U.S.-Switzerland Model 2 Intergovernmental Agreement (IGA) entered into force on June 30, 2014. Pursuant to the U.S.-Switzerland Model 2 IGA, Swiss Participating Foreign Financial Institutions (PFFIs) submit annual FATCA reporting directly to the U.S. Internal Revenue Service (IRS) after obtaining the consent of the reportable U.S. clients. If such client refuses to give consent, the U.S. government must request related information from the Swiss government.
Swiss PFFIs have also had the burden of submitting to the U.S. IRS a one-time certification of preexisting accounts (COPA) and a periodic certification every three years. These obligations will continue until the Model 1 IGA actually comes into force.
Model 1 IGA
The Swiss Federal Council approved the mandate for negotiations with the U.S. to switch to a Model 1 IGA on October 8, 2014. Now that the negotiations have concluded and a Model 1 IGA has been signed, Switzerland will need time to amend national law and Swiss FIs must implement new internal systems. It is expected that the Model 1 IGA will come into force on January 1, 2027.
The change to a Model 1 IGA will impact Swiss FIs in a variety of ways including:
Tracking new Swiss law and guidance
Updating internal policies and procedures
Adapting internal reporting systems for differences between IRS IDES and the Swiss Federal Tax Administration (FTA) portal
Communicating with clients that reporting will be mandatory not based on individual client consent
Training staff
For assistance, please contact me via my contact page or at elizabeth@elizabethmcmorrowlaw.com.
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