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Conditional Tax Gross-Up Clauses Bulletin

The association would like to highlight that the conditions specified in such carve-outs are not monitored by the paying agents or International Central Securities Depositories (ICSDs), Clearstream Banking and Euroclear SA/NV, when making payments on securities.

The ICMSA has noted during a review of new Eurobond standalone and programme documentation increasing instances of conditional carve-outs to tax gross-up clauses, that is to say instances where the obligation on an issuer to gross-up payments in respect of an obligation to withhold tax is dependent on certain conditions being fulfilled such as e.g. a connection between the bondholder with the State in which the Issuer is resident.

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