Reporting deadlines in accordance with American extra-territorial legislation have been delayed again as the burden of compliance weighs heavily on Luxembourg.

Tax authorities in the grand duchy have delayed the deadline for financial institutions to comply with the US Foreign Account Tax Compliance Act 2010 to 31 August 2015. This is the second time that Luxembourg has delayed the FATCA reporting deadline, which is meant to prevent expat US persons from evading taxes.

The small European jurisdiction signed a 'model one' intergovernmental agreement with the US on 28 March 2014, requiring all of its so-called foreign financial institutions, or FFIs, ranging from banks to hedge funds, to report account details held by US persons to the Luxembourg Inland Revenue, its tax authority, which in turn is planning to share the information with the US Internal Revenue Service.

Thierry Haensenberger, the Luxembourg entity manager and senior vice president of AxiomSL, said that other countries had had false starts. He went on: “The postponement of FATCA reporting in Luxembourg and Mauritius will be welcomed. However, the truth is that most firms will not need to submit a large number of reports for FATCA this year, as the scope of reporting is limited to accounts that were opened by US taxpayers and citizens between July and December 2014. The real challenge will come in 2016, when firms will also need to report on accounts opened before July 2014.”

The original deadline was on 30 June, which would be the stipulated annual filing deadline after Luxembourg’s parliament adopted the FATCA law on 1 July 2015. It was delayed until 31 July and is now delayed another month. If regular information on financial accounts related to US persons is not reported, they will face a 30% withholding tax on certain payments of US-sourced income.

“Next year will also see the beginning of reporting under the British equivalent of FATCA (‘UK FATCA’) and the beginning of preparations for the implementation of the Common Reporting Standard (a global version of FATCA, to which the Americans have not signed up). With this in mind, I expect to see firms migrating to more robust, automated solutions for the reporting of their FATCA and related returns next year,” added Haensenberger.