What Is an Intergovernmental Agreement (IGA)?
An Intergovernmental Agreement (IGA) is a bilateral treaty-level arrangement under which a partner jurisdiction and the United States implement FATCA account reporting by financial institutions.
Also known as: FATCA IGA, Model 1 or Model 2 Agreement.
How Intergovernmental Agreement (IGA) works
An Intergovernmental Agreement (IGA) is a bilateral agreement which adapts the US Foreign Account Tax Compliance Act to a partner country's legal system, so that local foreign financial institutions identify accounts held by US persons and report them without breaching domestic privacy or banking-secrecy rules. Under a Model 1 IGA, financial institutions report specified information about US accounts to the partner jurisdiction, which in turn passes the data to the IRS on an automatic basis. Under a Model 2 IGA, financial institutions report specified information directly to the IRS, under the partner government's direction. Due-diligence procedures, exempt accounts and reporting details follow each agreement and its annexes, which differ by jurisdiction.
Intergovernmental Agreement (IGA) vs Common Reporting Standard (CRS)
Unlike the Common Reporting Standard, a multilateral OECD framework for exchange among many jurisdictions, an Intergovernmental Agreement implements one US statute and centres reporting on accounts linked to US persons.
Example
Illustrative example: A US citizen working remotely opens a savings account in Country A, which has signed a Model 1 IGA. The bank requests a self-certification of US status, flags the account as reportable and sends balance and income details to Country A's tax authority, which forwards the data to the IRS.
Common misconception
Myth: Keeping savings at a bank outside the United States keeps the account out of IRS view.
Reality: Through Intergovernmental Agreements, financial institutions in partner jurisdictions report accounts held by US persons either directly to the IRS or through the local tax authority.
Frequently asked questions
What is the difference between Model 1 and Model 2 IGA?
Under a Model 1 Intergovernmental Agreement, financial institutions report US account information to the partner jurisdiction, which forwards the data to the IRS; under a Model 2 agreement, institutions report directly to the IRS.
Why do foreign banks ask about US citizenship?
Banks in jurisdictions with an Intergovernmental Agreement must identify accounts held by US persons for FATCA reporting, so account-opening forms generally include a self-certification of citizenship and tax residence.
Related terms
- FATCA (Foreign Account Tax Compliance Act) — US statute which every IGA implements locally
- Common Reporting Standard (CRS) — Multilateral reporting standard often confused with IGAs
- Foreign Financial Institution (FFI) — Institutions bound to report under IGA terms
- Reportable Account — Account category triggering IGA reporting
- Accidental American — US persons abroad often surprised by IGA reporting
Related guides
- Global tax reform and US digital nomads — Context on reporting regimes affecting US nomads
- US expat tax reform debate — US expat taxation and reporting debate
Sources
Last verified: 2026-10-08. This entry is general information, not tax or legal advice; rules vary by country and change over time.
