Neutralising The Effects Of Branch Mismatch Arrangements Action 2
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Neutralising the Effects of Branch Mismatch Arrangements, Action 2
Author: Organization for Economic Development and Cooperation
language: en
Publisher: Organization for Economic Co-Operation & Development
Release Date: 2017
This 2017 report sets out recommendations for branch mismatch rules that would bring the treatment of these structures into line with the treatment of hybrid mismatch arrangements as set out in the 2015 Report on Neutralising the Effects of Hybrids Mismatch Arrangements (Action 2 Report). Branch mismatches arise where the ordinary rules for allocating income and expenditure between the branch and head office result in a portion of the net income of the taxpayer escaping the charge to taxation in both the branch and residence jurisdiction. Unlike hybrid mismatches, which result from conflicts in the legal treatment of entities or instruments, branch mismatches are the result of differences in the way the branch and head office account for a payment made by or to the branch. The 2017 report identifies five basic types of branch mismatch arrangements that give rise to one of three types of mismatches: deduction / no inclusion (D/NI) outcomes, double deduction (DD) outcomes, and indirect deduction / no inclusion (indirect D/NI) outcomes. This report includes specific recommendations for improvements to domestic law intended to reduce the frequency of branch mismatches as well as targeted branch mismatch rules which adjust the tax consequences in either the residence or branch jurisdiction in order to neutralise the hybrid mismatch without disturbing any of the other tax, commercial or regulatory outcomes. The annexes of the report summarise the recommendations and set out a number of examples illustrating the intended operation of the recommended rules.
OECD/G20 Base Erosion and Profit Shifting Project Neutralising the Effects of Branch Mismatch Arrangements, Action 2 Inclusive Framework on BEPS
This 2017 report sets out recommendations for branch mismatch rules that would bring the treatment of these structures into line with the treatment of hybrid mismatch arrangements as set out in the 2015 Report on Neutralising the Effects of Hybrids Mismatch Arrangements (Action 2 Report).
Hybrid Mismatch Rules and EU Primary Law
Author: Ingrid Birgitte Lund
language: en
Publisher: Kluwer Law International B.V.
Release Date: 2025-07-15
EUCOTAX Series on European Taxation Hybrid mismatch rules, as enacted based on Articles 9, 9a, and 9b of the EU Anti-Tax Avoidance Directive (ATAD), obligate Member States to alter the tax treatment for cross-border transactions in order to prevent non-taxation or double non-taxation which may occur when a transaction is not only deductible for the payer but also deductible or not taxed as income for the payee. This book explores whether the transposed national hybrid mismatch rules adopted under the ATAD infringe on taxpayers’ right to free movement under the fundamental freedoms and clarifies the extent of the protection these freedoms afford in direct tax cases. The author’s far-reaching analysis extends to such considerations as the following: why hybrid mismatches arise; scope of application of the hybrid mismatch rules and the conditions for them to apply; whether the EU has the legal competence to enact hybrid mismatch rules; assessment of the hybrid mismatch rules under the CJEU-developed discrimination test; and whether the general abuse of law principle serves as an exception to the taxpayer’s reliance on fundamental freedoms. Recognizing the tension in international tax law between competition and cooperation – including the extent to which a taxpayer covered by the hybrid mismatch rules, by invoking the fundamental freedoms, can claim the benefits that hybrid mismatch rules deprive them of – the answers and clarifications in this deeply informed book contribute to foreseeability and legal certainty for both corporations and governments. With it as a guide, both practitioners and policymakers will ensure appropriate application of hybrid mismatch rules, develop a keen awareness of how these rules affect taxpayers and their right to free movement and understand how the fundamental freedoms may be invoked as taxpayer protection.