Template:M summ 2002 ISDA 5(b)(iv): Difference between revisions
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A “{{isdaprov|Burdened Party}}” is different from an “{{isdaprov|Affected Party}}” because the tax obligation — well, ''burden — resulting from the merger of one counterparty may fall on the ''other'' one. If I were Russian and you Cypriot, and I was able to pay without withholding thanks to the Russia-Cyprus double tax treaty, and you went and merged into a Scottish company, meaning you became Scottish, then suddenly I can’t take advantage of that marvellous double tax treaty any more. In that case I am the “{{isdaprov|Burdened Party}}” — the one suffering the tax burden — but you are the “{{isdaprov|Affected Party}}” — since it was your merger which triggered the unhappy tax transformation. | A “{{isdaprov|Burdened Party}}” is different from an “{{isdaprov|Affected Party}}” because the tax obligation — well, ''burden'' — resulting from the merger of one counterparty may fall on the ''other'' one. If I were Russian and you Cypriot, and I was able to pay without withholding thanks to the Russia-Cyprus double tax treaty, and then ''you'' went and merged into a Scottish company, meaning you became Scottish, and ceased to be Cypriot for tax purposes, then suddenly I can’t take advantage of that marvellous double tax treaty any more. In that case I am the “{{isdaprov|Burdened Party}}” — the one suffering the enhanced tax burden — but you are the “{{isdaprov|Affected Party}}” — since it was your merger which triggered the unhappy tax transformation. | ||
In the case where my merger also caused me to suffer the tax burden, I would be both the Burdened Party ''and'' the Affected Party. | In the case where my merger also caused me to suffer the tax burden, I would be both the Burdened Party ''and'' the Affected Party. | ||
This is you can imagine, a red letter day for {{icds}} w2ho quite outdid itself in the complicated permutations for how to terminate an {{isdama}} should there be a {{isdaprov|Tax Event}} or a {{isdaprov|Tax Event Upon Merger}}. Things kick off in Section {{isdaprov|6(b)(ii)}} and it really just gets better from there on in.<ref>It doesn’t.</ref> | This is you can imagine, a red letter day for {{icds}} w2ho quite outdid itself in the complicated permutations for how to terminate an {{isdama}} should there be a {{isdaprov|Tax Event}} or a {{isdaprov|Tax Event Upon Merger}}. Things kick off in Section {{isdaprov|6(b)(ii)}} and it really just gets better from there on in.<ref>It doesn’t.</ref> | ||
Revision as of 18:16, 13 September 2022
A “Burdened Party” is different from an “Affected Party” because the tax obligation — well, burden — resulting from the merger of one counterparty may fall on the other one. If I were Russian and you Cypriot, and I was able to pay without withholding thanks to the Russia-Cyprus double tax treaty, and then you went and merged into a Scottish company, meaning you became Scottish, and ceased to be Cypriot for tax purposes, then suddenly I can’t take advantage of that marvellous double tax treaty any more. In that case I am the “Burdened Party” — the one suffering the enhanced tax burden — but you are the “Affected Party” — since it was your merger which triggered the unhappy tax transformation.
In the case where my merger also caused me to suffer the tax burden, I would be both the Burdened Party and the Affected Party.
This is you can imagine, a red letter day for ISDA’s crack drafting squad™ w2ho quite outdid itself in the complicated permutations for how to terminate an ISDA Master Agreement should there be a Tax Event or a Tax Event Upon Merger. Things kick off in Section 6(b)(ii) and it really just gets better from there on in.[1]
- ↑ It doesn’t.