United States: Final And Proposed Regulations Address U.S. Withholding Tax On U.S. Equity Derivatives

Last Updated: December 24 2013
Article by Shlomo Boehm, Mark P. Howe, David S. Miller, Daniel J. Mulcahy and Jason D. Schwartz

Most Read Contributor in United States, October 2018

I. INTRODUCTION

On Tuesday, December 4, the IRS and the Treasury Department issued proposed regulations that, if finalized as proposed, would dramatically increase the extent to which U.S. withholding tax is imposed on U.S. equity derivatives. On the same day, the IRS and the Treasury Department also issued final regulations that extend the current withholding rules for these derivatives through December 31, 2015.

Very generally, the proposed regulations would impose U.S. withholding tax on any derivative that references one or more U.S. equities that pay dividends, even if the derivative does not explicitly reference a dividend payment, unless the derivative has a delta of less than 0.70 with respect to the underlying stock or qualifies for one of several narrow exceptions. Delta is the ratio of the change in the fair market value of a derivative to the fair market value of the underlying stock.

Although the proposed regulations generally would dramatically increase the extent to which U.S. withholding tax is imposed on derivatives that reference U.S. equities, they stop short of imposing withholding tax on all such derivatives, and therefore invite financial engineering to avoid the withholding tax. The proposed regulations also would not impose withholding tax on some derivatives that provide for payments that are subject to withholding tax under the current rules. And they will be difficult for the IRS to enforce. Finally, the proposed regulations mark the first time that the IRS has proposed a rule based on delta. The use of delta could have broad potential application in the taxation of financial instruments, possibly to define straddles, wash sales, constructive ownership and sale transactions.

Part II of this memorandum discusses section 871(m) and the new final regulations. Part III of this memorandum discusses the proposed regulations.

II. SECTION 871(M) AND THE FINAL REGULATIONS

Payments of U.S.-source dividends to foreign persons generally are subject to a 30% U.S. withholding tax.1 By contrast, payments that reference dividends under most equity swaps historically were not treated as U.S.-source dividends and were not subject to U.S. withholding tax. Section 871(m) was enacted to prevent foreign persons from avoiding the withholding tax on U.S.-source dividends. Under section 871(m) and temporary regulations issued in 2012, any "dividend equivalent payment"that is, a payment that is contingent upon, or determined by reference to, the payment of a U.S.-source dividend—made before January 1, 2014 to a foreign party under an equity swap is subject to a 30% U.S. withholding tax if:

  • the foreign party transfers the underlying stock to its counterparty in connection with the transaction (i.e., the underlying stock "crosses in"),
  • the counterparty transfers the underlying stock to the foreign party at the termination of the transaction (i.e., the underlying stock "crosses out"),
  • the underlying stock is not readily tradable on an established securities market, or
  • the underlying stock is posted as collateral to the foreign party in connection with the transaction.2

The final regulations extend these rules through December 31, 2015.

Under section 871(m) and the final regulations, a 30% U.S. withholding tax will be imposed on every dividend equivalent payment to a foreign party under an equity swap beginning January 1, 2016, except to the extent new regulations are issued that provide that the swap does not have the potential for tax avoidance. The proposed regulations would define the class of equity swap that does not have the potential for tax avoidance, and therefore is not subject to U.S. withholding tax.

III. THE PROPOSED REGULATIONS

A. In General

Under the proposed regulations, beginning January 1, 2016, any dividend equivalent payment to a foreign party under an equity swap, and any dividend equivalent payment to a foreign party under any other derivative that is acquired on or after March 5, 2014, would be subject to a 30% U.S. withholding tax if, at the time the foreign party enters into or acquires the derivative, the "delta" of the derivative—that is, the ratio of the change in the derivative's fair market value to the change in the stock's fair market value—is at least 0.70 or is not reasonably expected to vary throughout the term of the derivative.3

Although the proposed regulations impose withholding only on dividend equivalent payments, the proposed regulations generally deem dividend equivalent payments to be made on any derivative that references U.S. dividend-paying stock, regardless of whether the derivative in fact references dividend payments. Accordingly, the proposed regulations generally would impose withholding tax on forward and future contracts that do not provide for and are not adjusted to account for dividend payments, and "price return only" swaps that do not reference dividend payments.

On the other hand, the proposed regulations exempt derivatives whose delta is less than 0.70 with respect to the underlying stock (and is reasonably expected to vary throughout the term of the derivative), and therefore invite foreign investors to structure derivatives that provide for dividend equivalent payments to have a variable delta that is less than 0.70. Options, debt instruments, and variable share forward contracts can all be structured to have variable deltas of less than 0.70. Moreover, under the proposed regulations, a foreign investor that currently holds a physical U.S. equity security and is subject to withholding tax could sell the security to its counterparty and simultaneously enter into a derivative on the security that provides for a variable delta of less than 0.70, and escape U.S. withholding tax on the dividend equivalent payments. This foreign investor is subject to withholding under the final regulations and would have been subject to withholding under prior proposed regulations under section 871(m), but is not under the new proposed regulations.

B. Multiple reference stocks

If a derivative references the stock of more than one issuer, the derivative's delta generally is determined separately with respect to each stock, without taking into account any other stock or other property or liability. So, for example, if an equity swap provides a foreign party with 100% upside, downside, and dividend exposure to 100 shares of IBM stock and 100 shares of Apple stock during the term of the swap, under the proposed regulations,the swap's delta is determined solely with respect to the IBM stock and solely with respect to the Apple stock (so that, in this example, the delta would be 1.00 for each).4

The proposed regulations provide an exemption from U.S. withholding tax under section 871(m) for dividend equivalent payments made with respect to a "qualified index." A qualified index is an index that, at the time the derivative is entered into or acquired by the foreign party:

  • references at least 25 securities,
  • references only long positions with respect to component securities,
  • contains no component security that represents more than 10% of its weighting,
  • is modified or rebalanced only according to predefined objective rules and set dates or intervals,
  • does not provide a dividend yield from component securities that exceeds 150% of the dividend yield reported on the S&P 500 index for the month immediately preceding the date the foreign party enters into or acquires the derivative, and
  • is referenced by futures or option contracts that trade on a national securities exchange or a domestic board of trade.5

An index is also a qualified index if, at the time the derivative is entered into or acquired by the foreign party, the index is composed solely of long positions in assets and the referenced component underlying U.S. equity securities in the aggregate comprise 10% or less of the index's weighting. Thus, no withholding would be required for dividend equivalent payments on a total return swap with respect to an index of international equities where U.S. equities comprise 10% or less of the index's weighting.

C. Related transactions and anti-abuse rule

If a foreign party or a person related to the foreign party enters into or acquires more than one position with respect to the same stock, and the transactions are entered into "in connection with" each other (whether or not they are entered into simultaneously or with the same counterparty), then the positions are aggregated to determine whether any dividend equivalent payments under the positions are subject to withholding tax under section 871(m).6 Thus, if a foreign party enters into an equity swap that provides the foreign party with dividend equivalent payments, but capped upside and downside so that the equity swap has a delta that is less than 0.70 with respect to the underlying equity, and the foreign person also buys a call option and sells a put option so that the combined delta of the three derivatives is at least 0.70 with respect to the equity security, the foreign party would be subject to U.S. withholding tax with respect to the dividend equivalent payments on all three derivatives.

The proposed regulations do not define "in connection with," but provide that if a foreign party enters into a transaction to adjust its economic position with respect to a stock, the foreign party is treated as having entered into the transaction in connection with any transactions that the foreign party has previously entered into with respect to the stock.

For example, assume a foreign party purchases a six-month call option that has a delta of 0.60 with respect to the stock of a U.S. issuer and, three months later, when the call option still has a delta of 0.60, writes a put option that causes the delta of the combined derivatives to be 0.90 with respect to stock of the same issuer. Dividend equivalent payments under the call option after the sale of the put option would be subject to withholding tax under section 871(m) because, at the time the foreign party sells the put option, the delta of the combined transaction is at least 0.70.

The regulations require a counterparty to withhold on a dividend equivalent payment only if, after conducting reasonable diligence, the counterparty reasonably believes that the payment is subject to withholding tax under section 871(m). In each of the foregoing examples, if the counterparty to one transaction did not have any knowledge of the other transactions, it would have no obligation to withhold. It will be difficult for the IRS to enforce the proposed regulations against foreign investors in these cases.

The proposed regulations also contain an anti-abuse rule that permits the IRS to treat any dividend equivalent payment with respect to a transaction that is entered into with a principal purpose of avoiding the proposed regulations as subject to a 30% withholding tax.

D. Definition of dividend equivalent payment

Dividend equivalent payments include actual payments, estimated dividend payments, and adjustments to a derivative's interest rate, notional amount, purchase price, premium, strike price, or other terms to account for dividends or estimated dividends. In addition, dividend equivalent payments include gross amounts that reference the payment of a U.S.-source dividend and are used in computing any net amounts due under a derivative.7

For example, if a swap provides a foreign party with upside and downside exposure to a stock, and requires the foreign party to pay a LIBOR-based rate to its counterparty that is reduced to reflect expected annual dividends on the stock, then the foreign party is treated as receiving dividend equivalent payments by reason of the reduction. This is true even if no payment is required under the swap until termination and, at termination, the foreign party is not entitled to receive any amounts under the swap.

Dividend equivalent payments also include payments to a foreign party under a derivative that references interests in a partnership or other "pass-through entity" to the extent that the payments are attributable to U.S.-source dividends, unless the underlying stock represents no more than 10% of the referenced interests at the time the foreign party enters into or acquires the derivative and there is no "plan or intention" for acquisitions or dispositions that would cause the underlying stock to represent more than 10% of the referenced interests.

E. Amount of dividend equivalent payment

The proposed regulations define a dividend equivalent payment as the product of three items:

  • The amount of the per share dividend. If a derivative provides for a payment based on an estimated dividend that is not adjusted to reflect the amount of the actual dividend, and the formula for determining the estimated dividend is specified in the relevant offering document or operative documents, then the amount of the per share dividend is the lesser of the estimate and the actual dividend.
  • The number of reference shares. The number of reference shares is adjusted to take into account any "leveraging" provided by the derivative. For example, if a total return swap provides a foreign party with 125% upside, downside, and dividend exposure to 100 shares of stock, then the number of reference shares is 125.
  • The delta of the derivative. For this purpose, if a derivative has a term of more than one year, the delta of the derivative is calculated at the earlier of the stock's ex-dividend date and the record date of the dividend. If a derivative has a term that is one year or less, the delta of the derivative is calculated when the foreign party disposes of its position in the derivative.8

Thus, if a foreign party enters into a two-year total return swap with respect to 100 shares of a U.S. equity security, but the swap provides for capped upside and downside exposure with respect to the security and therefore has a delta of 0.75 at the time it is entered into, and a delta of 0.90 at the stock's ex-dividend date and at the record date of the dividend, then the amount of the dividend equivalent payment that is subject to withholding tax under the proposed regulations is the amount of dividends paid by the underlying issuer with respect to 100 shares of its stock, multiplied by 0.90.

F. Exemptions for foreign dealers and M&A transactions

The proposed regulations exempt dividend equivalent payments to a foreign dealer from withholding tax if the dealer certifies to its counterparty in writing that it is entering into the transaction in its capacity as a securities dealer and will withhold any tax imposed under section 871(m) with respect to transactions that it enters into as a short party in its capacity as a securities dealer. The proposed regulations also exempt dividend equivalent payments to a foreign party that is obligated to acquire more than 50% of the value of the entity issuing the underlying securities (i.e., pursuant to a stock purchase or merger agreement).

G. Reporting by brokers and dealers

Under the proposed regulations, if only one party to a derivative is a broker or dealer, then the broker or dealer is required to exercise reasonable diligence to determine whether payments under the derivative are subject to U.S. withholding tax under section 871(m), and must provide to its counterparty the delta of the derivative at each relevant testing time, the timing and amount of any dividend equivalent payments, the amount of any tax withheld, and any other information necessary to apply the proposed regulations within 14 days after the counterparty requests the information. In all other cases, the short party—that is, the party that is required to withhold on the dividend equivalent payment—must determine and provide this information.

Accordingly, under the proposed regulations, brokers, dealers, and other short parties will be required to determine the delta of each equity derivative whenthey enter into the derivativewith a foreign party (or when the foreign party acquires the derivative), andon the ex-dividend date for the underlying stock, the record date for the underlying stock and/or the date their counterparty disposes of its position. These parties also will be required to determine whether an index is a qualified index each time they enter into an equity derivative with a foreign party (or the foreign party acquires the derivative).

H. Potential "cascading" of withholding tax

The proposed regulations may result in multiple withholdings on the same stream of dividends. For example, if a foreign party holds a U.S. equity security and enters into a short forward contract with respect to the equity security with a foreign counterparty, it will be subject to withholding tax on dividends paid with respect to the equity security, and will be required to withhold tax on dividend equivalent payments under the forward contract. The withholding tax on dividend equivalent payments would, in effect, be a second withholding tax with respect to the dividends.

I. Possible broader application of delta

The proposed regulations for the first time use the concept of delta to provide an objectively determinable standard to distinguish financial instruments for tax purposes. Delta could potentially replace a number of vague definitions that exist in the tax code to define straddles, wash sales, and constructive ownership and constructive sale transactions.

Footnotes

1 U.S.-source dividends are not subject to a 30% U.S. withholding tax if the dividends are effectively connected to the foreigner's conduct of a trade or business in the United States. In this case, the dividends are subject to U.S. federal net income tax. Certain tax treaties reduce the rate of withholding below 30%.

2 In addition, under section 871(m), any substitute dividend made to a foreign party pursuant to a securities lending or sale-repurchase transaction that is a dividend equivalent payment is subject to a 30% U.S. withholding tax.

3 If the delta of a derivative is not reasonably expected to vary throughout the term of the instrument, then the derivative is treated as having a delta of 1.0 with respect to an adjusted number of reference shares. For example, if an equity swap provides a foreign party with 50% upside, downside, and dividend exposure to 100 shares of a stock during the term of the swap, and the swap's fair market value is expected to appreciate or depreciate by $0.50 for every $1.00 that the stock appreciates or depreciates at the time the foreign party enters into the swap (i.e., the delta is not reasonably expected to vary throughout the item of the instrument), then the swap will be treated as having a delta of 1.0 with respect to 50 shares of the stock (instead of having a delta of 0.50 with respect to 100 shares of the stock).

4 As drafted, the proposed regulation could provide for harsh results in certain cases. For example, assume that a derivative provides a foreign person with the excess, if any, of the dividends paid by IBM on 100 shares of stock over the dividends paid by Apple on 100 shares of stock, plus the appreciation, if any, of 100 shares of IBM stock over the appreciation, if any, of 100 shares of Apple stock, and requires the foreign party to pay the excess of the depreciation, if any, of 100 shares of IBM stock over the depreciation, if any, of 100 shares of Apple stock. The regulations appear to require withholding on the gross amount of dividends on 100 shares of IBM stock, presumably on the theory that the contract could have been written as a long swap on IBM shares and a separate short swap on Apple shares.

5 The qualified index exemption was intended to permit a foreign person to hold a total return swap on the S&P 500 without withholding under section 871(m). However, it is not clear that the S&P 500 index is modified or rebalanced according to predefined objective rules on set dates or intervals, because the sponsor has discretion as to the timing of modifications to the index components. We expect the definition of "qualified index" to be clarified to include the S&P 500 index and similar indices.

6 It is unclear from the language of the proposed regulations whether a "dividend return only" swap and a "price return only" swap can be aggregated under this rule if the "price return only" swap does not itself provide for dividend equivalent payments, since a precondition for aggregation is that the foreign party be the "long party" with respect to each transaction, and the proposed regulations define "long party" as the party that is entitled to a dividend equivalent payment.

7 However, after the amount of a dividend equivalent payment has been determined, withholding is not required with respect to the payment until the money or property of the party that is subject to withholding is under the custody or control of the counterparty.

8 The proposed regulations provide that the delta of an option at exercise is treated as 1.0, and the delta of an option at lapse is treated as 0.0. Therefore, a foreign party that acquires an option with a term of one year or less will not be subject to U.S. withholding tax under section 871(m) with respect to the option if the option lapses.

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
Cadwalader, Wickersham & Taft LLP
Kramer Levin Naftalis & Frankel LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Cadwalader, Wickersham & Taft LLP
Kramer Levin Naftalis & Frankel LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions