An intergovernmental agreement (IGA) between Belgium and the US is to be signed on 23 April 2014 in relation to the implementation of the US Foreign Account Tax Compliance Act (FATCA). The IGA requires the tax administrations of the two countries to exchange tax information automatically in relation to accounts held in foreign financial institutions in Belgium by US taxpayers, and also involves the provision of information to Belgium by the IRS.
The agreement will allow Belgian banks enough time to ensure that they can conform to the requirements of the IGA, including following the electronic procedure as set out in the agreement. Banks need to have the correct procedures in place. If a foreign financial institution (FFI) fails to submit information this could give rise to a 30 percent withholding tax on US source payments, and potential loss of banking relationships and business.
The Belgian Finance Minister considers that the IGA will lead to improved enforcement of international tax requirements and will prevent the imposition of a withholding tax. The IGA is to apply from September 2015.
