JPMorgan Chase & Co. Clarifies Tax Implications for Notes Linked to U.S. Equities

JPMorgan Chase & Co. has provided information regarding the federal income tax consequences of an investment in certain financial instruments, specifically notes linked to U.S. equities or indices that include U.S. equities.

The notes are subject to Section 871(m) of the Code, which imposes a 30% withholding tax on dividend equivalents paid or deemed paid to Non-U.S. Holders unless an income tax treaty applies. However, the IRS has recently issued a notice excluding instruments issued prior to January 1, 2027 that do not have a delta of one with respect to underlying securities that could pay U.S.-source dividends for U.S. federal income tax purposes.

JPMorgan Chase & Co. has determined that Section 871(m) will not apply to the notes with regard to Non-U.S. Holders, but this determination is not binding on the IRS and may be disputed.