Karin Loch Hansen

Student thesis: Master thesis


This thesis analyses how the law regulates hybrid mismatch arrangements caused by hybrid financial instruments. Hybrid mismatch arrangements are viewed as a type of tax arbitrage, where different qualifications of an instrument in different jurisdictions can be used to obtain double non-­‐taxation. There are three laws analysed through judicial doctrine as examples of the regulation of hybrid mismatch arrangements. The first is Danish company tax law §2B, a rule based on a corresponding principle. The corresponding principle states how the tax treatment of a hybrid financial instrument should be symmetrical, even though the qualification of the instrument might differ in different jurisdictions. The second is a non-­‐adopted rule from the Base Erosion and Profit Shifting project by G20 and the OECD: Action 2 neutralising Hybrid Mismatch Arrangements. This rule takes the corresponding principle further than the Danish example. BEPS act.2 contains a defensive rule to be used if the opposing tax authority choses not to act on the double non-­‐taxation. Therefore this version of the corresponding principle has been developed to be utilized on a mutual basis. The third example of regulation is the proposed EU directive Common Consolidated Corporate Tax Base, where transactions within the group are transparent in a tax context. Because of this, hybrid mismatch arrangements hybrid financial instruments cannot occur within the group. For transactions outside the group, the directive regulations of interest deductions is not neutral and does not contain specified regulation of hybrid mismatch arrangements, causing the possibility for them to occur. It can be concluded that the three different laws, are examples of approaches created in different contexts and thereby having varying secondary objectives other than a symmetrical tax treatment

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2015
Number of pages81