On April 18, Jeffrey Hochberg presented his paper titled “The Section 871(m) Qualified Index Rules” at a meeting of The Tax Club. The meeting was held at The Harvard Club. Jeffrey also presented an earlier version of the paper at a meeting of The Tax Forum at The University Club.
The paper addresses the application of the Section 871(m) withholding tax rules to foreign investors in derivatives that reference equity indices. In particular, the paper considers the circumstances under which such a derivative should be treated for Section 871(m) purposes as referencing a notional index that is independent of its components and when it should be treated as referencing the equities that comprise the index.