The US Internal Revenue Service has just released final and temporary regulations addressing when payments on swap transactions and equity-linked instruments will be treated as dividend equivalents. Dividend equivalents paid to non US persons are subject to the same amount of withholding as are actual dividends. The final and temporary regulations replace proposed regulations issued in December 2013. Importantly, the final regulations apply to exchange-traded financial products, including options. Mark Leeds, of the New York office of Mayer Brown, examines the new regulations in this Legal Update.
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