Template:Withholding under ISDA: Difference between revisions

*'''Section {{isdaprov|3(e)}}''': I promise you that I do not have to withhold on my payments to you (as long as all your {{isdaprov|Payee Tax Representations}} are correct and you  have, under Section {{isdaprov|4(a)}}, given me everything I need to pay free of withholding);

*'''Section {{isdaprov|2(d)}}''': 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 {{isdaprov|Indemnifiable Tax}}), I'll gross you up. (You should look at the drafting of {{isdaprov|Indemnifiable Tax}}, by the way. It's quite a marvel). ... ''Unless'' the tax could have been avoided if the Payee had taken made all its 3(f) representations, delivered all its {{isdaprov|4(a)}} material, or had its {{isdaprov|3(f)}} representations been, like, ''true'').

The basic rationale is that if the tax arises as a result of the underlying instrument, there's no gross up. But if it is a function of the {{isdaprov|Payer}}'s status, then it is grossed up. Unless the {{isdaprov|Payee}} could have provided information to avoid it.