A spokesperson for the Irish Revenue Commissioners has confirmed that they are in contact with the US Treasury and discussions are ongoing, a statement from IFIA said.

“It was confirmed that any agreed approach would be based on domestic tax reporting legislation and automatic exchange of information under existing bilateral tax treaties,” it said.

The FATCA Act was enacted in 2010, taking effect from 2013; the legislation, which seeks to tighten compliance burdens on financial firms dealing with expat US citizens, has prompted some banks and investment firms to warn they will cease to cater to US clients on cost grounds. The law has also been criticised as an example of the US trying to impose its worldwide tax regime on the entire world. (To view a recent article about how different regions, such as Asia, are being affected, click here.)

The issue is significant for Ireland’s large industry for UCITS funds, for example. The IFIA recently said that Ireland logged €62 billion of inflows into UCITS funds last year, making it by far the most successful domicile for such funds.

In the statement today, the IFIA said: “It is understood that the approach being explored is to develop a model global agreement, which will be adopted under relevant bilateral tax treaties/exchange of information agreements.”

“The model agreement will not alter or amend the obligation to identify or report certain information under FATCA, but will outline an alternative pathway for reporting FATCA information.  The model agreement is expected by the end of June 2012,” the statement said.

“The fact that intergovernmental arrangements are likely to be based on a model agreement means that any framework under which bilateral exchange of information agreements operate should be done on a consistent basis, rather than under individual agreements which might be operated on a disjointed basis.  This is welcome news for an industry which operates on a multi-jurisdictional basis,” said Ken Owens, IFIA chairman.