BVI Signs 'UK FATCA' And US FACTA Is Expected To Follow

BVI Signs "UK FATCA"

The British Virgin Islands ("BVI") Government signed an agreement ("UK/BVI IGA") with the United Kingdom providing for automatic exchange of financial information relating to UK tax payers who hold accounts with BVI financial institutions, in November 2013. The agreement was effected by an exchange of letters amending the existing Tax Information Exchange Agreement originally signed in 2008. It closely follows the signing of very similar agreements between the UK and the Cayman Islands, Jersey, Guernsey and the Isle of Man. These arrangements are commonly referred to as "UK FATCA" in recognition of the fact that they owe their origin to the US's Foreign Account Tax Compliance Act. Indeed, the UK/BVI IGA largely follows the draft Model 1 IGA produced by the US Treasury. The definition of a financial institution ("FI") that will be subject to the UK/BVI IGA uses the same concepts as in the US FATCA legislation ("US FATCA Regulations") and includes a Custodial Institution, Depository Institution, Investment Entity, or a Specified Insurance Company. In practice, this will cover banks...