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Does the Bank Loan Exception Apply to Non-U.S. Banks that Pledge Cash Collateral in Derivative Transactions?  


Author:  Michael W. Bloomfield.; Dimitriy Shamrakov.


Source: Volume 20, Number 01, September/October 2006 , pp.5-10(6)




Journal of Taxation and Regulation of Financial Institutions

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Abstract: 

This article focuses on two important questions raised by the bank loan exception for transactions using ISDA documentation: (1) under what circumstances can the bank loan exception result in the application of the U.S. withholding tax regime to interest payments on cash collateral in derivative transactions, and (2) which party—U.S. pledgee or non-U.S. pledgor—bears the risk for any U.S. withholding taxes?

Keywords: 

Affiliations:  1: Stroock & Stroock & Lavan LLP; 2: Stroock & Stroock & Lavan LLP.

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