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.
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