Michiel Schul and Steffie Klein, members of our Tax team, have made a significant contribution to Tax Notes International. In their insightful article, they describe hybrid financing arrangements and mismatches between tax systems under the global anti-base-erosion model rules and provide illustrations of how these rules function.
In the article, we describe the treatment of certain hybrid financing arrangements (HFAs) under the OECD's global anti-base-erosion (GLOBE) model rules. We consider the consolidated commentary to the GLOBE rules and examples appended to the GLOBE rules as published on the date of this article's writing. We focus on the relevance of these rules to U.S. multinational enterprises in scope of the GLOBE rules with financing arrangements involving their European subsidiaries and illustrate how the rules work with some practical examples. We first describe how hybrid mismatches between the tax systems of countries are dealt with under the EU anti-tax-avoidance directive 2 (ATAD 2). We then discuss how the anti abuse provision in article 3.2.7 of the GLOBE rules seeks to prevent taxpayers from entering into certain HFAs. The final topic of discussion is how certain elements of the administrative guidance issued by the OECD on December 18, 2023, (the 2023 guidance) contains rules to eliminate mismatches as a result of HFAs for purposes of the transitional countryby-country safe harbor.
Download the article below and feel free to contact our experts for any specific queries or tailored advice. This article was first published by Tax Notes International.
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