The recently released intergovernmental agreement on FATCA (the IGA) between the US and the UK provides welcome prospective relief from many burdensome aspects of FATCA reporting and withholding. As with the model IGA on which it is based, however, it does not definitively address the important issue of withholding on ‘foreign passthru payments’ made by or to foreign financial institutions. In light of this and the uncertainty over which countries will eventually enter into IGAs, developing market practice dealing with FATCA in the documentation of many international capital markets, syndicated lending, securitisation, derivatives, and other transactions involving such institutions is unlikely to be affected immediately.
