Hybrid structures - implementation of the ATAD Directive 2

I.e. to avoid situations in which - due to differences in the treatment of an entity or instrument on tax grounds by different jurisdictions, there is a deduction without tax or a double deduction. Moreover, the provisions in question raise the issue of discrepancies resulting from the different classification of a permanent establishment and double tax residence.

The regulations of the implementing act introduced legal definitions, e.g. for the following terms:

• hybrid transaction - means an arrangement to transfer a financial instrument, where the same base income (revenue) from this instrument is treated for tax purposes as income (revenue) obtained by more than one party of such reconciliation;

• hybrid financial instrument - means a financial instrument that is qualified for tax purposes differently in the country of the payer than in the recipient's country, as well as a hybrid transaction;

• hybrid entity - means an entity that is treated as a non-transparent entity for tax purposes of one country, and is treated as a transparent entity for tax purposes of another country.

Downloads

• PKF Alert - Hybrid structures - implementation of the ATAD Directive 2.pdf [PDF]