FATCA and global lending transactions: extension to timeline and guidance on intergovernmental agreements

The Foreign Account Tax Compliance Act provisions of the U.S. Hiring Incentives to Restore Employment Act of 2010 ("FATCA") have been a hot topic in loan markets for some time and this looks set to continue. However, in a welcome development, a number of the key dates have been pushed back by six months and greater clarity has been provided on the status of intergovernmental agreements which have been signed but are yet to be fully brought into effect.

On 12 July 2013, the U.S. Internal Revenue Service released Notice 2013-43 (the "Notice") which, amongst other things:

  • extends the grandfathering period for obligations to be exempt from FATCA;
  • delays the date from which withholding obligations are to be introduced in respect of certain payments of U.S. source income; and
  • provides more details on the effect of the intergovernmental agreements entered into between the U.S. and various other jurisdictions which have been signed but are yet to come into force.

Further details on this development are set out below. For further background on FATCA more generally, see our U.S. Tax Alert Final FATCA Regulations Released dated January 2013.

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