IRS eyes US equity-linked notes in offshore crackdown

Substantial tax on “dividend equivalents” though questions remain

Marc Saffon, Societe Generale

Non-US buyers of structured products that reference US stocks will be among those hit with a higher tax bill when Internal Revenue Service rules meant to curb so-called 'dividend washing' trades become effective in 2016. The draft regulation, which closed for public comments on March 5, will apply a 30% tax to products such as reverse convertibles, autocallables and buffered notes to the extent the products pay out "dividend equivalents" that originate from an underlying US stock. The tax hit