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Description of a potential Section 871(m) IRC transaction
A potential Section 871(m) IRC transaction refers to transactions that could be subject to Section 871(m) IRC of the United States Internal Revenue Code (IRC).
Such transaction may be any derivative transaction that references interest in at least one security that could give rise to a United States source dividend. If the transaction is in-scope and subject to Section 871(m) IRC, a withholding tax may be levied on the dividend equivalent amounts from derivatives that reference dividend paying United States equities.
Current IRS transition relief
IRS Notice 2026-61 extends certain transition relief under Section 871(m) IRC through 2028. In particular, the Notice continues the phase-in approach for certain Section 871(m) transactions and provides transition relief in relation to specific QDD obligations under the Qualified Intermediary Agreement. The anti-abuse rule under Treasury Regulations Section 1.871-15(o) continues to apply.
Clearing Members remain responsible for assessing their own obligations under the applicable U.S. tax rules and the relevant IRS guidance.
As of 1 January 2017, Eurex Clearing AG has assumed the status as a Qualified Derivatives Dealer (QDD).
For purposes of Treasury Regulations Section 1.871-15(p), Eurex Clearing AG does not act as the determining party with respect to the identification of potential Section 871(m) IRC transactions, the applicable delta, combined transactions, dividend equivalent amounts or the timing of withholding. The respective assessment remains the responsibility of the relevant Clearing Member acting in its applicable capacity under the U.S. tax rules.
Please consider, that Eurex Clearing AG is acting as "reporting party" within the reporting obligations towards the IRS in conjunction with the potential in-scope assets for section 871(m) IRC derivatives transactions.
Where Eurex Clearing AG is receiving or treated as receiving dividend equivalent amounts as long party of a Section 871(m) IRC transaction, Eurex Clearing AG confirms that it does not employ any combined transaction strategies. Thus, any Clearing Member acting as withholding agent should not subject to any transactions in which Eurex Clearing AG is the long party to the combination rules under the presumptions of Treasury Regulations Section 1.871-15(n).
U.S. Clearing Members
A U.S. Clearing Member that is documented as a U.S. person by means of a valid Form W-9, Request for Taxpayer Identification Number and Certification, may clear potential Section 871(m) IRC transactions after providing Eurex Clearing AG with a duly executed Form W-9.
Non-U.S. Clearing Members
Non-U.S. Clearing Member may solely clear potential Section 871(m) IRC transactions when providing Eurex Clearing AG with a duly executed and valid Form W 8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding and Reporting) stating
Irrespective of the documentation provided to Eurex Clearing AG, each Clearing Member remains responsible for determining whether transactions cleared through Eurex Clearing AG are subject to Section 871(m) IRC and for meeting its own applicable documentation, withholding, reporting and tax payment obligations. This responsibility also includes the Clearing Member’s assessment of transactions cleared on behalf of its clients or Trading Members, where applicable. Eurex Clearing AG has no direct contractual relationship with the respective Trading Member in this context.
Clearing Members assigned to the relevant Section 871(m) capacity groups must provide Eurex Clearing AG with the information required for Form 1042-S reporting and the related reporting reconciliation. This includes confirmation of whether reportable Section 871(m) IRC transactions occurred during the respective reporting period.
Where no reportable transaction occurred, a nil report must be submitted.
The required information must be provided using the applicable reporting template available under "Further information". The completed report must be submitted no later than the tenth calendar day of the month following the relevant reporting month to the e-mail address reporting871m@eurex.com.
Disclaimer
Eurex Clearing AG does not provide legal or tax advice or tax assistance in relation to U.S. taxation or Section 871(m) IRC. The information provided is intended solely to support the operational understanding of the applicable U.S. tax requirements.
Each Clearing Member remains responsible for assessing and complying with its applicable legal and tax obligations, including any documentation, withholding, reporting and tax payment requirements relating to transactions cleared for its own account or on behalf of its clients or Trading Members. Clearing Members should consult their internal tax department or an independent legal or tax advisor where appropriate.