Hybrid Financial Instruments, Double Non-taxation and Linking Rules

Hybrid Financial Instruments, Double Non-taxation and Linking Rules focuses on the analysis of double non-taxation stemming from hybrid financial instruments (HFIs) and the solution provided by the Organisation for Economic Co-operation and Development (OECD) and the European Union (EU) tackling double non-taxation related to cross-border HFIs. HFIs are widespread ordinary financial instruments that combine debt and equity features in their terms and design and may lead to double non-taxation across borders. This important book provides a deeply informed and critical analysis and guide to the ‘linking rules’ developed to combat double non-taxation stemming from HFIs within the framework of the Base Erosion and Profit Shifting project of the OECD and the anti-avoidance initiatives of the EU. These complex rules have now become essential in international taxation. What’s in this book: This book deals incisively with crucial theoretical and practical issues as the following: • Economic and legal reasons for financing business activity through debt instruments, equity instruments and/or HFIs; • Qualification of financial instruments from different perspectives such as economics, corporate finance, corporate law, financial accounting law, regulatory law and tax law and their interrelation; • The concept of double non-taxation as a mere outcome of parallel exercises of sovereignty by different states and the role it plays within the international debate; • The concepts of tax planning, tax avoidance and the misleading concept of aggressive tax planning within a tax competition international scenario and their relation with HFIs; • Comprehensive policy, legal and technical detail and explanation of the linking rules proposed by the OECD (i.e., BEPS Project Action 2) and the EU (e.g., Anti-Tax Avoidance Directive); • The (in)compatibility of linking rules with existing tax treaty rules and EU primary law. The author refers throughout to relevant model convention provisions, EU case law and a vast number of references of official documentation and literature.