Neutralising the Effects of Hybrid Mismatch Arrangements, Action 2 - 2015 Final Report
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.
Published on October 05, 2015Also available in: German, French
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