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Legal Update

Stress Relief: IRS Notice 2016-76 Eases the Implementation Rules for Cross-Border Dividend Equivalent Withholding

5 December 2016
Mayer Brown Legal Update

The final and temporary regulations promulgated by the Internal Revenue Service (the “IRS”) in 2015 under section 871(m) of the Internal Revenue Code of 1986, as amended, create a new and extraordinary set of withholding rules with respect to dividend equivalents actually or deemed paid to non-US persons. Financial institutions, as the purveyors of equity swaps and other financial products linked to US stocks and securities, are the taxpayers that will be required to implement the new withholding rules. The rules were originally scheduled to become fully effective for financial products issued in 2017. With only days to go before the new rules were to take effect, the IRS answered industry pleas to provide more time to retool their withholding systems through Notice 2016-76. Mark Leeds of the New York office of Mayer Brown analyzes the changes made by the Notice in the attached Legal Update.


  • Mark H. Leeds
    T +1 212 506 2499
  • James R. Barry
    T +1 312 701 7169
  • Hayden D. Brown
    Senior Counsel
    T +1 704 444 3512
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