Canada: New Expatriation Rules Under Sections 877A And 2801

Last Updated: December 2 2008

Article by Ellen Seiler Brody and Jason K.Binder*

Co Editors: Stanford H. Goldberg* and Peter A. Glicklich**


With the passage of the Heroes Earnings Assistance and Relief Tax Act of 20081 ("the heart Act") on June 17, 2008, circumstances changed drastically for those individuals who were planning to give up their US citizenship and for long-term US residents who were planning to give up their green cards. This act, with its vetoproof name, was designed to provide tax relief for US soldiers. In order to pay for this relief, however, Congress imposed a new "exit tax" on Americans seeking to revoke their US citizenship.

The United States taxes its citizens on their worldwide income. The only way US citizens can legally avoid paying US taxes is to expatriate. Under the old expatriation regime, expatriates continued to be subject to US taxation on an expanded class of US-source income for 10 years after the date of their expatriation. With careful planning, however, it was usually easy to avoid taxation during the 10-year period, unless you died.

Now, rather than being subject to a 10-year alternative income tax regime on US-source income and effectively connected income, after which expatriates would be virtually free from US taxation on built-in gains that they successfully postponed triggering, such taxation cannot be avoided, and is imposed immediately. There is no "tax-avoidance" motive requirement; anyone expatriating from the United States for any reason is potentially subject to the tax. The taxpayer so snared is subject to an immediate tax on a deemed sale of all his or her worldwide assets on the day immediately prior to the date of expatriation. The old regime has been entirely repealed and replaced with this new "exit tax" regime for taxpayers who expatriate on or after June 17, 2008.

The philosophy behind the new regime—to tax expatriates on the unrealized appreciation that accrued while they were US persons—is unquestionably logical, and there are several advantages and disadvantages in the rules implementing the regime. This new system is infinitely simpler, but the ability to avoid tax merely by remaining alive and delaying sales of appreciated assets for more than 10 years no longer exists. The old regime, however, limited the time that an expatriate could spend in the United States during the 10-year period after expatriation to 30 days or less each year; beyond this limit, the expatriate would be treated anew as a citizen or a long-term resident. The new rules have removed this restriction and instead rely on the general "substantial presence test"2 to render an expatriate a US resident again, for federal tax purposes.

Who Is Subject to the New Regime?

The new regime is applicable to individuals referred to in the Code as "covered expatriates." A covered expatriate is any US citizen who relinquishes citizenship or any long-term resident who terminates US residency, if such individual (1) has an average annual net income tax liability for the five years immediately preceding the deemed expatriation that exceeds $139,0003 ("the net income tax liability requirement"); (2) has a net worth of $2 million or more on the date of expatriation ("the net worth requirement"); or (3) fails to certify under penalties of perjury that he or she has complied with all US federal tax obligations for the preceding five years or such other evidence as the Secretary4 may require.

A US citizen is treated as having relinquished US citizenship on the earliest of four possible dates: (1) the date on which the individual renounces US nationality before a diplomatic or consular officer of the United States;5 (2) the date on which the individual furnishes to the State Department a signed statement of voluntary relinquishment of US nationality confirming the performance of an expatriating act;6 (3) the date on which the State Department issues a certificate of loss of nationality; or (4) the date on which a US court cancels a naturalized citizen's certificate of naturalization.7 The date on which the individual relinquishes citizenship is "the expatriation date."8

An individual is considered to terminate long-term US residency when the individual ceases to be a lawful permanent resident of the United States—that is, loses his or her green card status through revocation or administrative or judicial determination of abandonment of such status. An individual will also cease to be treated as a lawful permanent resident of the United States if he or she commences to be treated as a resident of a foreign country under a tax treaty between the United States and the foreign country, does not waive the benefits of the treaty applicable to residents of the foreign country, and notifies the Secretary of the commencement of such treatment.9 The date on which long-term residency is terminated is "the expatriation date."10

The current rule that provides that an individual continues to be taxed as a US citizen or long-term resident for US tax purposes until he or she files form 8854, "Initial and Annual Expatriation Information Statement," has been repealed. The new regime does provide two exceptions to exclude citizens who would otherwise be considered "covered expatriates" because they satisfy either the net income tax liability requirement or the net worth requirement. The first exception applies to an individual who was born with citizenship both in the United States and in another country, but only if (1) as of the expatriation date, the individual continues to be a citizen of, and is taxed as a resident of, the other country, and (2) the individual has been a resident of the United States11 for not more than 10 taxable years during the 15-year period ending with the taxable year of expatriation.12 The second exception applies to a US citizen who relinquishes US citizenship before reaching age 181⁄2, but only if the individual was a resident of the United States for not more than 10 taxable years before such relinquishment.13 This is much more lenient than the standards in the old regime for these two exceptions, which required that (1) the individual was not present in the United States for more than 30 days in any calendar year that was one of the 10 calendar years preceding the expatriation date, and (2) for the dual-resident exception, the individual had never been a US resident.

The Mark-to-Market Tax of Section 877(A)(a)

Covered expatriates are now subject to the mark-to-market tax, an income tax on the net unrealized gain on their worldwide property as if the property had been sold for its fair market value on the day immediately prior to the expatriation date.14 Gain from the deemed sale is taken into account at that time without regard to other Code provisions.15 Any loss from the deemed sale generally is taken into account to the extent otherwise provided in the Code.16

Any net gain on the deemed sale is recognized to the extent that it exceeds $600,000 (which is increased by a cost-of-living adjustment factor for calendar years after 2008).17 This amount was coordinated with the estate tax exemption to help render an individual's decision to relinquish citizenship or terminate residency taxneutral. Certain items—deferred compensation items, specified tax-deferred accounts, and interests in non-grantor trusts—are not subject to the mark-to-market tax, but rather are covered under other rules, as explained further below.18

A covered expatriate may elect to defer payment of the mark-to-market tax imposed on the deemed sale, an option that is especially helpful to those who are not actually selling any assets and may not otherwise have the cash to pay the tax bill.19

The election to defer is irrevocable and is made on a property-by-property basis.20 If the election is made with respect to a particular property, the deferred tax attributable to such property is due when the return is due for the taxable year in which the property is eventually disposed of—or, if the property is disposed of in a transaction in which gain is not recognized in whole or in part, at such other time as the Secretary may prescribe.21 In any event, the deferral period must end by the due date of the return for the taxable year in which the expatriated individual dies.22

To elect deferral of the mark-to-market tax, the covered expatriate must furnish "adequate security" to the Secretary.23 Adequate security may be in the form of a bond or other security mechanism, such as a letter of credit, that adheres to the Secretary's requirements.24 In the event that the security provided with respect to a particular property subsequently fails to meet the requirements of these rules and the individual fails to correct such failure, the deferred tax and accrued interest with respect to such property will become immediately due.25 Realistically, for certain types of assets held by the expatriate, such as a limited partnership interest, it might be difficult to satisfy the security obligations.

As a further condition to making the deferral election, the covered expatriate must consent to the waiver of any treaty rights that would preclude the assessment or collection of the tax.26 Many of the current US income tax treaties may have to be renegotiated to prevent double taxation arising from this exit tax. When the old expatriation rules were amended in 1996, the committee reports indicated that the Code overrode any conflicting treaty provisions for 10 years, but if any conflicting provision was still in force after 10 years, the treaty would override the amendments. When the expatriation rules were amended again in 2004, the committee reports were silent as to the interaction between the Code and treaties, leading to much confusion. Since the current committee reports are also silent on this subject, it is imperative that all US income tax treaties be reviewed and possibly amended to alleviate any double taxation burden.

The authors of the recent fifth protocol to the Canada-US income tax convention, signed on September 21, 2007, however, appear to have had this new regime in mind. The protocol states that, with respect to an individual emigrating from one country to the other, for the purposes of taxation in the destination country, pre-departure gain taxed in the first country immediately before the individual's emigration will be exempt under the treaty from taxation in the destination country.27 As a result, there will be no tax payable in Canada on any pre-emigration gain (unless the property would otherwise be taxable, as is the case with certain immovable property located in Canada).

No Real Estate Exception

This new exit tax regime was in the making for several years. Earlier versions of these rules had been commented on by various legal and accounting groups, which offered helpful advice to make the final legislation more effective and administrable. One noteworthy suggestion, which was not acted upon, was to add an exemption for US real property interests. Because such interests are currently subject to tax when owned by foreigners, it seems draconian to force expatriates to pay tax (or post security) on the appreciation on these assets upon expatriation when they would still be subject to tax upon actual disposition. Other countries, including Canada, exempt from their exit taxes assets that will otherwise be taxable upon their ultimate disposition.

Because the deemed sale occurs on the day immediately prior to the expiration date, the covered expatriate should still be eligible, however, for the partial exemption for gain on the sale of a personal residence. In addition, the deemed sale will increase the covered expatriate's basis such that any future actual disposition of the US real property will be taxable only to the extent of the increase in value from the date of the deemed sale to the date of the ultimate disposition of the property.

Special Rules for Eligible Deferred Compensation Items

Deferred Compensation Items

As stated above, the mark-to-market tax does not apply to interests in "deferred compensation items." A deferred compensation item is (1) any interest in certain enumerated plans,28 (2) any interest in a foreign pension or similar retirement arrangement or program, (3) any item of deferred compensation, or (4) any property, or right to property, that the individual is entitled to receive in connection with the performance of services to the extent not previously taken into account.29

An "eligible deferred compensation item" is any deferred compensation item in which the payer is either a US person or a non-US person who elects to be treated as a US person for purposes of withholding, provided that the covered expatriate notifies the payer of his or her status as a covered expatriate and irrevocably waives any claim of withholding reduction under any treaty with the United States.30 There is no immediate tax upon expatriation with respect to "eligible deferred compensation items." Rather, the payer must deduct and withhold from any "taxable payment" to the covered expatriate a tax equal to 30 percent of such taxable payment.31 Note that in order to be subject to this favourable deferral treatment, the expatriate must notify the payer of his or her status; otherwise the mark-to-market tax will apply. A taxable payment is subject to withholding to the extent that it would be included in the gross income of the covered expatriate if such person were subject to tax as a citizen or resident of the United States.32 A deferred compensation item is taken into account as a payment when such item would be includible in gross income. Employers have to watch out for these notices and make sure that they have appropriate withholding systems in place to comply with the new requirements.

If a deferred compensation item is not an "eligible" deferred compensation item, the deferred amount is deemed immediately includible in the expatriate's income in an amount equal to the present value of the covered expatriate's accrued benefit on the day before the expatriation date as a distribution under the plan, and is subject to tax at US income tax rates.33 In the case of a deferred compensation item that is subject to section 83 of the Code, the rights of the covered expatriate to such item are treated as becoming transferable and no longer subject to a substantial risk of forfeiture on the day before the expatriation date.34 Justifiably, however, the Code does not subject these deemed distributions to the additional early distribution tax.35 Furthermore, appropriate adjustments are made to subsequent distributions to take into account the foregoing treatment.36

These rules do not apply to a deferred compensation item to the extent that it is attributable to services performed outside the U nited S tates while the covered expatriate was not a citizen or resident of the United States.37

Specified Tax-Deferred Accounts

As stated above, the mark-to-market tax also does not apply to a "specified taxdeferred account," which includes an individual retirement plan, a qualified tuition plan, a Coverdell education savings account, a health savings account, and an Archer medical savings account.38 If a covered expatriate holds an interest in any of these specified tax-deferred accounts on the day before the expatriation date, the covered expatriate is treated as having received his or her entire interest in such account as a distribution on the day before the expatriation date.39 But again, these deemed distributions are not subject to the additional early distribution tax.40

Interests in Trusts

The mark-to-market tax does not apply, finally, to any interest in a "non-grantor trust." A "grantor trust" is a trust the income of which is taxable to the grantor for US tax purposes. For purposes of this section, the term "non-grantor trust" means the portion of any trust of which the covered expatriate is not considered to be the owner.41

Special rules apply, however, if the covered expatriate was a beneficiary of a nongrantor trust on the day before the expatriation date.42 In the case of any direct or indirect distribution of property from a non-grantor trust to a covered expatriate for the remainder of the covered expatriate's lifetime, the trustee must deduct and withhold from the distribution an amount equal to 30 percent of the "taxable portion" of the distribution.43 The taxable portion with respect to any distribution is that portion that would be includible in the gross income of the covered expatriate if the covered expatriate continued to be subject to tax as a citizen or resident of the United States.44 The covered expatriate, for purposes of this rule, is treated as having waived any right to claim any reduction in withholding under any treaty with the United States, whether or not any such waiver is actually made.45 If the non-grantor trust distributes appreciated property to a covered expatriate, the trust must recognize gain as if the property were sold to the covered expatriate at its fair market value.46

These rules apply to both domestic and foreign non-grantor trusts. It will be interesting to see, when regulations are proposed, how the S ecretary will seek to enforce these rules, especially against foreign trustees. Unlike the rule for deferred compensation, there is no duty imposed on the expatriate to notify the trustee of his or her status as a covered expatriate. In addition, this provision applies only to nongrantor trusts of which the covered expatriate was a beneficiary on the day before the expatriation date. Thus, if the trust was not created until after the expatriation date, or the covered expatriate was not named as a beneficiary until after the expatriation date, future distributions from the trust would be free from US tax.

If a trust that is a non-grantor trust immediately before the expatriation date subsequently becomes a grantor trust of which a covered expatriate is treated, directly or indirectly, as the owner, such conversion is treated under the Code as a distribution to the covered expatriate to the extent of the portion of the trust of which the covered expatriate is treated as the owner.47 In the case of grantor trusts, the assets held by that portion of the trust of which the covered expatriate is considered to be the grantor are subject to the mark-to-market tax, and the amount required to be recognized at that time will not be taxable again upon its ultimate distribution from the trust. If a trust that is a grantor trust immediately before the expatriation date subsequently becomes a non-grantor trust, the trust remains a grantor trust for purposes of this Code provision.

Miscellaneous Provisions

Termination of Deferrals

Any deferral of recognition of gain that the covered expatriate might have had is deemed to be terminated for purposes of calculating the mark-to-market tax.48 This provision includes incomplete transactions such as deferred like-kind exchanges and involuntary conversions.49 In addition, any extension of time for payment of tax ceases to apply on the day before the expatriation date, and the unpaid portion of such tax becomes due and payable at the time and in the manner prescribed by the Secretary.50

Step-Up in Basis

For purposes of determining the tax imposed by the mark-to-market tax of section 877a, property that was held by a covered expatriate on the date on which he or she first became a resident of the United States is treated as having a basis of not less than the fair market value of the property on that date.51 A covered expatriate may make an irrevocable election to have this rule not apply.52

Treatment of Gifts and Bequests from a Covered Expatriate

The heart Act also added section 2801 to the Code, imposing a tax on certain "covered gifts or bequests" received by US citizens or residents.53 A covered gift or bequest is any property acquired (1) by gift from a person who is a covered expatriate54 at the time of the acquisition, or (2) by reason of the death of an individual who was a covered expatriate immediately before death.55 The tax imposed by section 2801 can conceivably arise even decades after the person expatriated, because there is no statute of limitations on gifts received from covered expatriates. A covered gift or bequest, however, does not include (1) any property shown as a taxable gift on a timely filed gift tax return filed by the covered expatriate, or (2) any property included in the gross estate of the covered expatriate for estate tax purposes and shown on a timely filed estate tax return filed by the estate of the covered expatriate. 56 Additionally, transfers to a covered expatriate's spouse or to charity are not considered covered gifts or bequests.57

The tax imposed by section 2801 is calculated as the product of (1) the greater of the highest rate of tax applicable to estates and gifts, and (2) the value of the covered gift or bequest.58 The tax is imposed upon the recipient of the covered gift or bequest and is imposed on a calendar-year basis, only to the extent that the total value of covered gifts and bequests received by the recipient during the calendar year exceeds the amount of the annual per-donee exclusion under the Code.59 The tax on covered gifts and bequests is reduced by the amount of any gift or estate tax paid to a foreign country with respect to such covered gift or bequest.60 Again, it is difficult to see how this will be enforced, especially when the transfer occurs many years after the person expatriated. The recipient might never know that he or she is liable for the tax.

Special rules are also included to impose taxation upon covered gifts or bequests made to domestic or foreign trusts.61 In the case of a covered gift or bequest made to a domestic trust, the tax applies as if the domestic trust were a US citizen, and the trust is required to pay the tax.62 In the case of a covered gift or bequest made to a foreign trust, the tax applies to any distribution from the trust (whether from income or from corpus) attributable to the covered gift or bequest to a recipient who is a US citizen or resident in the same manner as if such distribution were a covered gift or bequest.63 S uch a recipient may deduct the amount of such tax for income tax purposes to the extent that the tax is on the portion of the distribution that is included in the recipient's gross income. This takes into account the fact that the fiduciary income tax rules of the Code already tax the receipt of income by a US person from a foreign trust, and thus seeks to prevent the double taxation of such income.64 For purposes of these rules, a foreign trust may elect to be treated as a domestic trust; such election may be revoked only with the Secretary's consent.65 Unfortunately, there is no guidance as to how to determine what portion of the distribution is attributable to the covered gift or bequest, rendering the enforcement of this provision even more difficult.

Effective Date

The new exit tax regime is effective for US citizens who relinquish citizenship or long-term residents who terminate their residency on or after the date of enactment, June 17, 2008.66 The portion of the provision relating to covered gifts and bequests is effective for gifts and bequests received on or after June 17, 2008 from former citizens or former long-term residents (or the estates of such persons) whose expatriation date is on or after June 17, 2008.67

Coming Back

If a covered expatriate becomes subject to tax as a citizen or resident of the United States for any period beginning after his or her expatriation date, the individual is not treated as a covered expatriate during that period for purposes of applying the withholding rules relating to deferred compensation items, the rules relating to interests in non-grantor trusts, and the rules relating to gifts and bequests from covered expatriates. If the individual again relinquishes citizenship or terminates long-term residency (after meeting anew the requirements to become a long-term resident), the mark-to-market tax and other provisions are again triggered upon the new expatriation date.68

Who Benefits from the New Regime?

For some people contemplating expatriation, this new regime is a welcome relief. For individuals who hold most of their assets in cash and unappreciated property, and have no heirs who will be US residents or citizens in the future, the new regime permits expatriation with little immediate tax and no worries about future gifts and bequests. Those individuals will be able to come to the United States as needed without having to manoeuvre around the former 30-day annual limitation. Nor need they worry that they must survive another 10 years from the expatriation date in order to avoid US estate taxes. They can continue to purchase US securities, and future appreciation in such securities will be free from US taxation.

For individuals with most of their assets in appreciated property, however, the cost is significantly higher, and further investigation is needed before expatriation. For those who expect their family to expatriate as well (or for those whose families are not already US citizens and/or residents), it might make sense to expatriate now, pay the current capital gains tax rate, and start the next chapter of their lives, especially while the capital gains tax rate is relatively low. For those with children who will continue to be US residents and/or citizens, careful analysis is required to see if the eventual tax imposed on gifts and bequests outweighs the benefits of expatriation.


Given the current political environment, the fact that an individual could trigger all of his or her capital gains this year (while rates are low and values even lower), without worrying about surviving the next 10 years, might be all that was needed for some people who had been toying with the idea of expatriating to act this year. It is very possible that capital gains rates will increase drastically in the future, as could estate taxes. Many people have already cashed out their investments this year owing to poor market conditions (and thus have already effectively marked themselves to market) and therefore would have to pay little, if any, additional tax upon expatriation. There is also an incentive for those people who have not yet accumulated much wealth to expatriate now. Given the global economy and the ability to work from virtually anywhere these days, there is little impediment to relocating to a lowtax jurisdiction and making one's fortune there.

The decision to maintain US citizenship or residency, however, involves much more than taxation, including, for example, political ideologies, proximity to family and friends, and employment opportunities. One should not let taxation alone rule this decision.


* Of Roberts & Holland LLP, New York and Washington, DC.

** Of Davies Ward Phillips & Vineberg LLP, New York.

1. Pub. L. no. 110-245, enacted on June 17, 2008.

2. See the Internal Revenue Code of 1986, as amended (herein referred to as "the Code"), section 7701(b)(1)(A)(ii). Unless otherwise stated, statutory references in this article are to the Code.

3. Rev. proc. 2007-66, section 3.29, 2007-45 IRB 970. This amount is indexed each year to reflect cost-of-living increases.

4. All references to "the Secretary" are to the Secretary of the Treasury, unless otherwise indicated.

5. Provided that the voluntary relinquishment is later confirmed by the issuance of a certificate of loss of nationality. Section 877A(g)(4).

6. Ibid.

7. See sections 877A(g)(4)(A)-(D).

8. Section 877A(g)(3)(A).

9. See section 7701(b)(6).

10. Section 877A(g)(3)(B).

11. Under the substantial presence test of section 7701(b)(1)(A)(ii).

12. Sections 877A(g)(1)(B)(i)(I)-(II).

13. Sections 877A(g)(1)(B)(ii)(I)-(II).

14. Sections 877A(a)(1) and (2)(A).

15. Section 877A(a)(2)(A).

16. Section 877A(a)(2)(B).

17. Sections 877A(a)(3)(A) and (B).

18. See sections 877A(c)(1)-(3).

19. Section 877A(b)(1). Interest is charged for the period the tax is deferred at the rate normally applicable to individual underpayments. Section 877A(b)(7).

20. Section 877A(b)(6).

21. Section 877A(b)(1).

22. Section 877A(b)(3).

23. Section 877A(b)(4)(A).

24. Sections 877A(b)(4)(B)(i) and (ii).

25. Section 877A(b)(3) (parenthetical).

26. Section 877A(b)(5).

27. See article 8 of the Protocol Amending the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital Done at Washington on 26 September 1980, as Amended by the Protocols Done on 14 June 1983, 28 March 1984, 17 March 1995 and 29 July 1997, signed at Chelsea, Quebec on September 21, 2007.

28. The enumerated plans and arrangements are those described in section 219(g)(5), which include certain exempt trusts; certain annuity plans; plans established by, and for employees of, the United States, by a State or political subdivision thereof, or by an agency or instrumentality of any of the foregoing; annuity contracts; simplified employee pensions; simplified retirement accounts; and certain other trusts.

29. Sections 877A(d)(4)(A)-(D).

30. Section 877A(d)(3)(B).

31. Section 877A(d)(1)(A).

32. Section 877A(d)(1)(B).

33. Section 877A(d)(2)(A)(i).

34. Section 877A(d)(2)(A)(ii).

35. Section 877A(d)(2)(B).

36. Section 877A(d)(2)(C).

37. Section 877A(d)(5).

38. Section 877A(e)(2). Simplified employee pensions (within the meaning of section 408(k)) and simplified retirement accounts (within the meaning of section 408(p)) of a covered expatriate, however, are treated as deferred compensation items and not as specified tax-deferred accounts.

39. Section 877A(e)(1)(A).

40. Section 877A(e)(1)(B).

41. Section 877A(f )(3).

42. Sections 877A(c)(3) and (f )(5).

43. Section 877A(f )(1)(A).

44. Section 877A(f )(2).

45. Section 877A(f )(4)(B).

46. Section 877A(f )(1)(B).

47. See United States, Staff of the Joint Committee on Taxation, Technical Explanation of H.R. 6081, the "Heroes Earnings Assistance and Relief Tax Act of 2008," as Scheduled for Consideration by the House of Representatives on May 20, 2008, JCX-44-08 (Washington, DC: Joint Committee on Taxation, May 20, 2008), 44.

48. Section 877A(h)(1)(A).

49. See supra note 47, at 44.

50. Section 877A(h)(1)(B).

51. Section 877A(h)(2).

52. Ibid.

53. Sections 2801(a) and (b).

54. For purposes of section 2801, "covered expatriate" has the meaning given to such term by section 877A(g)(1).

55. Section 2801(e).

56. Section 2801(e)(2).

57. Section 2801(e)(3).

58. Section 2801(a).

59. Sections 2801(a)-(c). The annual per-donee exclusion amount is $12,000 for 2008. See Rev. proc. 2007-66, supra note 3, section 3.32(1).

60. Section 2801(d).

61. See section 2801(e)(4).

62. Section 2801(e)(4)(A).

63. Section 2801(e)(4)(B)(i).

64. Section 2801(e)(4)(B)(ii).

65. Section 2801(e)(4)(B)(iii).

66. HEART Act, supra note 1, section 301(g)(1).

67. Ibid., section 301(g)(2).

68. Ibid.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.