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Clifford Chance

Clifford Chance

Briefings

FATCA, fungibility and foresight - beware 18 March 2012

6 October 2011

FATCA potentially imposes US withholding tax on, among other things, interest and principal paid by all US issuers and by non-US issuers that are "financial institutions". While the withholding is currently scheduled to be phased in over 2014 and 2015, FATCA contains a grandfather rule which excludes payments with respect to debt securities treated as outstanding on 18 March 2012. This may make it difficult for any issuer whose debt securities are potentially subject to FATCA withholding to tap (or re-open) after 18 March 2012 a series of debt securities issued and outstanding before this date.

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