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Hybrid Mismatches in International Transactions: A Study of Linking Rules in EU and Tax Treaty Law
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Law, Department of Law.
2024 (English)Doctoral thesis, monograph (Other academic)
Description
Abstract [en]

Hybrid mismatches, where differences in income characterisation across jurisdictions lead to double non-taxation, can be exploited by multinational enterprises to reduce their overall tax burden. Common hybrid mismatch rules addressing this issue have recently been introduced within the EU and the OECD. The adoption of these rules is unprecedented and poses a novelty for many states’ national tax systems. Beyond being technically complex, the operation of these rules necessitates interactions with other anti-avoidance rules, tax treaty provisions, EU law, OECD guidelines, and national rules in foreign jurisdictions.

This thesis makes a significant contribution through its extensive structural examination of hybrid mismatches and their rules, covering both EU and tax treaty law. The examination primarily focuses on the hybrid mismatch rules in EU secondary law and their interactions with other aspects of EU and tax treaty law in preventing such mismatches. The analysis is conducted within the context of the rules’ underlying objectives.

The study highlights five formal objectives of the rules: preventing tax avoidance, neutrality, equity, administrability, and legal certainty. However, a critical examination reveals that these objectives often lack substance or resemble political slogans. Several structural premises contributing to the occurrence of hybrid mismatches are identified, including the general trend of reducing or eliminating withholding taxes within EU and tax treaty law. While the hybrid mismatch rules play a crucial role in preventing mismatches, their complex design and technical limitations render them vulnerable to circumvention. Another issue is that they often risk resulting in unresolved double taxation when interacting with other parts of EU and tax treaty law. Ultimately, the rules are primarily focused on preventing tax avoidance but tend to overlook other objectives. The study particularly advocates for improved administrability and legal certainty.

Place, publisher, year, edition, pages
Uppsala: Department of Law, Uppsala University , 2024. , p. 543
Keywords [en]
hybrid mismatch, linking rules, hybrid mismatches, hybrid mismatch rules, taxation, international taxation, tax treaty, OECD MTC, BEPS, EU law, ATAD
National Category
Law
Research subject
Fiscal Law
Identifiers
URN: urn:nbn:se:uu:diva-519397ISBN: 978-91-506-3036-7 (print)OAI: oai:DiVA.org:uu-519397DiVA, id: diva2:1824686
Public defence
2024-03-15, Sal IV i Universitetshuset, Biskopsgatan 3, Uppsala, 10:15 (Swedish)
Opponent
Supervisors
Available from: 2024-02-07 Created: 2024-01-07 Last updated: 2024-02-07

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Arfwidsson, Autilia

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CiteExportLink to record
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