Neutralising the Effects of Hybrid Mismatch Arrangements, Action 2 - 2015 Final Report [electronic resource] /
Organisation for Economic Co-operation and Development.
Paris : OECD Publishing,
2015.
This report sets out recommendations for domestic rules to neutralise the effect of hybrid mismatch arrangements and includes changes to the OECD Model Tax Convention to address such arrangements.  Once translated into domestic law, the recommendations in Part 1 of the report will neutralise the effect of cross-border hybrid mismatch arrangements that produce multiple deductions for a single expense or a deduction in one jurisdiction with no corresponding taxation in the other jurisdiction. Part I of the report sets out recommendations for rules to address hybrid mismatches in respect of payments made under a hybrid financial instrument or payments made to or by a hybrid entity.  It also recommends rules to address indirect mismatches that arise when the effects of a hybrid mismatch arrangement are imported into a third jurisdiction. The recommendations are supported by a commentary and examples to illustrate how they should apply. Part 2 of the report sets out proposed changes to the Model Convention that will ensure the benefits of tax treaties are only granted to hybrid entities (including dual resident entities) in appropriate cases.  Part 2 also considers the interaction between the OECD Model Convention and the domestic law recommendations in Part 1.
Part I. Recommendations for domestic law Introduction Chapter 1. Hybrid financial instrument rule Chapter 2. Specific recommendations for the tax treatment of financial instruments Chapter 3. Disregarded hybrid payments rule Chapter 4. Reverse hybrid rule Chapter 5. Specific recommendations for the tax treatment of reverse hybrids Chapter 6. Deductible hybrid payments rule Chapter 7. Dual-resident payer rule Chapter 8. Imported mismatch rule Chapter 9. Design principles Chapter 10. Definition of structured arrangement Chapter 11. Definitions of related persons, control group and acting together Chapter 12. Other definitions Part II. Recommendations on treaty issues Introduction Chapter 13. Dual-resident entities Chapter 14. Treaty provision on transparent entities Chapter 15. Interaction between Part I and tax treaties Annex A. Summary of Part I recommendations Annex B. Examples
This report sets out recommendations for domestic rules to neutralise the effect of hybrid mismatch arrangements and includes changes to the OECD Model Tax Convention to address such arrangements.  Once translated into domestic law, the recommendations in Part 1 of the report will neutralise the effect of cross-border hybrid mismatch arrangements that produce multiple deductions for a single expense or a deduction in one jurisdiction with no corresponding taxation in the other jurisdiction. Part I of the report sets out recommendations for rules to address hybrid mismatches in respect of payments made under a hybrid financial instrument or payments made to or by a hybrid entity.  It also recommends rules to address indirect mismatches that arise when the effects of a hybrid mismatch arrangement are imported into a third jurisdiction. The recommendations are supported by a commentary and examples to illustrate how they should apply. Part 2 of the report sets out proposed changes to the Model Convention that will ensure the benefits of tax treaties are only granted to hybrid entities (including dual resident entities) in appropriate cases.  Part 2 also considers the interaction between the OECD Model Convention and the domestic law recommendations in Part 1.
Taxation