Template:M summ 1992 ISDA Indemnifiable Tax
Withholding under the ISDA
TL;DR: The basic rationale is this:
- if the tax relates to the underlying instrument, rather than the Template:Isdaprov¬isda92prov’s residence or tax status, the Template:Isdaprov¬isda92prov does not have to gross up.
- if the tax relates to the Template:Isdaprov¬isda92prov’s residence or tax status, then the Payer does have to gross up unless the Template:Isdaprov¬isda92prov should have provided information to the Template:Isdaprov¬isda92prov which would have entitled the Template:Isdaprov¬isda92prov to avoid the tax.
- if you’ve agreed the Template:Isdaprov¬isda92prov, the Template:Isdaprov¬isda92prov doesn’t have to gross up any Template:Isdaprov¬isda92proves.
The combination of the Template:Isdaprov¬isda92prov and the Template:Isdaprov¬isda92prov clause of the ISDA Master Agreement has the following effect:
- Section Template:Isdaprov¬isda92prov: I promise you that I do not have to withhold on my payments to you (as long as all your Template:Isdaprov¬isda92prov are correct and you have, under Section Template:Isdaprov¬isda92prov, given me everything I need to pay free of withholding);
- Section Template:Isdaprov¬isda92prov: I will not withhold on any payments to you. Unless I am required to by law. Which I kind of told you I wasn’t... If I have to withhold, I'll pay the tax the authorities and give you the receipt. If I only had to withhold because of my connection to the taxing jurisdiction (that is, if the withholding is an Template:Isdaprov¬isda92prov), I’ll gross you up. (You should look at the drafting of Template:Isdaprov¬isda92prov, by the way. It's quite a marvel). ...
- Template:Isdaprov¬isda92prov: Unless the tax could have been avoided if the Template:Isdaprov¬isda92prov had taken made all its Template:Isdaprov¬isda92prov representations, delivered all its Template:Isdaprov¬isda92prov material, or had its Template:Isdaprov¬isda92prov representations been, like, true).
- Template:Isdaprov¬isda92prov is a whole other thing.
- As is FATCA, which (as long as you’ve made your Template:Isdaprov¬isda92prov or signed up to a Template:Isdaprov¬isda92prov, provides that Template:Isdaprov¬isda92proves are excluded from the Section Template:Isdaprov¬isda92prov Template:Isdaprov¬isda92prov, and also from the definition of Template:Isdaprov¬isda92prov. Meaning one doesn't have to rep, or gross up, FATCA payments.