Komparativ analyse af hybride finansielle instrumenter: Ud fra et regnskabsmæssigt og skatteretligt perspektiv

Toan Duc Luu & Annemette Mortensen

Student thesis: Master thesis


This thesis presents a comparative analysis from an accounting and tax perspective of hybrid financial instruments. The scope of this thesis is solely focused on the issue of classification of hybrid instruments and the challenges it poses to the fair view and presentation in the financial reporting. Final in the end of the thesis the most developed alternatives to the current IAS 32 are introduced. The thesis analyzes this classification issue from a normative perspective. In order to define the underlying reasons for the challenges related to classification, definitions of equity and liabilities are theoretically described for both accounting (based on international IFRS standards) and tax (based on interpretation of Danish tax legislation). Firstly, it is concluded that discrepancies between accounting and tax are based on the difference underlying rationals they are serving; where accounting perceived classification of a hybrid financial instrument from an investor-risk perspective, tax legislation is more concerned about tax-shield. Secondly, accounting defines equity as a residual of assets, whereas tax legislation is based on obligation law's definition of ownership. Furthermore, there is a widely inconsistence usage of entity or proprietary view in IAS 32, and the basic principles in IAS 32 are not aligned with the IFRS Framework. These issues challenge a fair view of the financial presentation of the tax and legal features of the hybrid financial instruments. Based on the above challenges, the thesis presents some of the alternatives that have been developed by IASB, FASB and EFRAG, and discussed whether these can solve the above challenges. Basic Ownership Approach (BOA) and Loss Absorbtion Approach (LAA) are both more or less based on legal ownership and are therefore both aligned with the tax legislation. However, BOA has been eliminated by IASB and LAA requires that the structure of the financial reporting is altered since LAA differs between equity, risk capital and liabilities. At current state no workable alternatives for the present IAS 32 exist. In order to illustrate the analysis and the challenges related to the classification issue, three cases are used throughout the thesis.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2011
Number of pages141