Withholding Tax - EFET Allowance Provision

2007 EFET General Agreement
Version 2.1(a) (Power)

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14.5 in a Nutshell

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§ 14.5. Withholding Tax: If this § 14.5 is specified as applying in Part II of this Allowances Appendix, the following shall apply between the Parties:
(a) Payments Free and Clear: All payments under an Individual Contract shall be made without any withholding of or deduction for or on account of any Tax unless such withholding or deduction is required by law. If a Party is so required to withhold or deduct Tax from a payment to be made by it, then that Party (“Paying Party”) shall notify the other Party (“Receiving Party”) immediately of such requirement and pay to the appropriate authorities all amounts withheld or deducted by it. If a receipt or other evidence can be issued evidencing the payment to the authorities, the Paying Party shall deliver such evidence (or a certified copy thereof) to the Receiving Party.
(b) Grossing-Up: The Paying Party shall increase the amount of any payment which is required to be made subject to a withholding or deduction to the extent necessary to ensure that, after the making of the required withholding or deduction, the Receiving Party receives the same amount it would have received had no such withholding or deduction been made or required to be made, except that no increase shall be made in respect of any Tax:
(i) which is only imposed as a result of a connection between the Receiving Party and the jurisdiction of the authority imposing the Tax (including, without limitation, a connection arising from the Receiving Party having or having had a permanent establishment or other fixed place of business in that jurisdiction, or having been present or engaged in business in that jurisdiction) other than the mere execution or delivery of this General Agreement, any Confirmation or any Credit Support Document; or
(ii) which could have been avoided if the Receiving Party had delivered to the Paying Party or to the appropriate authority as reasonably requested by the Paying Party, any declaration, certificate, or other documents specified in the Election Sheet in a form reasonably satisfactory to the Paying Party; or
(iii) which is only imposed as a result of any Tax representation made by the Receiving Party in the Election Sheet for the purposes of this § 14.5 failing or ceasing to be true and accurate provided that this paragraph (iii) shall not apply (and the Paying Party shall be obliged to increase the amount of any payment pursuant to this § 14.5(b)) if such representation has failed or ceased to be true and accurate by reason of:
(aa) any change in, or in the application or interpretation, of any relevant law, enactment, directive, or published practice of any relevant Tax authority being a change occurring on or after the date on which the relevant Individual Contract is entered; or
(bb) any action taken by a Tax authority, or brought in a court of competent jurisdiction, on or after the date on which the relevant Individual Contract is entered into.


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Template:M comp disc EFET Allowance Annex 14.5


It is a regrettable fact that EFET’s Carbon Squad chose for its WHT clause the exact label that the other emissions master documents use for the Transaction parties themselves: “Receiving Party” in the EFET Allowances Appendix — the person who receives a payment over which there is some tax consequence — is not the same as Receiving Party in the ISDA EU Emissions Annex or Receiving Party in the IETA Master Agreement — the person who is delivered Allowances. That person, in the EFET Allowances Appendix, is the Buyer.

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Template:M premium EFET Allowance Annex 14.5

See also

Template:M sa EFET Allowance Annex 14.5