Final Partnership Withholding Regulations Map New Terrain for Private Equity Investors and Sponsors
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Key takeaways:
- The Treasury and the IRS have released eagerly anticipated Final Regulations on US withholding on transfers of partnership interests by non-US transferors.
- The Final Regulations include helpful changes from prior guidance that may allow more transferors to qualify for exemptions or reductions to withholding, but transferring parties may still face challenges where partnerships do not provide US tax information.
- As the regulations come into force, sponsors will likely be asked to be more involved in the transfer process and should consider the implications of these rules for subsequent closing arrangements.