New Rules Address Scope of US Withholding on US Equity-Linked Swap Payments

February 03, 2012
The Foreign Account Tax Compliance Act includes a number of revenue-raising provisions affecting cross-border transactions, including those that subject certain “dividend equivalent” payments to U.S. withholding tax by treating those payments as dividends from U.S. sources. This update examines new interpretive guidance and its potential impact on non-U.S. persons seeking to gain exposure to U.S. equities through swaps and other U.S. equity-linked derivatives.