Holiday Party: The IRS Releases Final Regulations on Cross-Border Dividend Equivalents Paid on Swaps and in Security Lending Transactions
9 December 2013
Mayer Brown Legal Update
On December 4, 2013, final regulations were issued under Section 871(m) of the Internal Revenue Code for dividend equivalents paid to non-US persons prior to 2016, and regulations were proposed for dividend equivalents paid after such date. Among other things, the regulations provide that the four categories of statute-specified swaps that can give rise to dividend equivalents remain the sole types of equity derivative transactions (apart from securities loans) that can give rise to US-source dividend equivalents. The proposed regulations for post-2016 dividend equivalents provide for a new regime under which withholding is proposed to be required.