Hybrid Finance in the Double Tax Treaties

Six, Martin (2007) Hybrid Finance in the Double Tax Treaties. Discussion Papers SFB International Tax Coordination, 21. SFB International Tax Coordination, WU Vienna University of Economics and Business, Vienna.

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Abstract

The compartmentalisation of company finance into equity and debt does not truly capture the enormous diversity of financial instruments available. A wide variety of hybrid instruments incorporate elements of both equity and debt. From a fiscal point of view the classification of such hybrid instruments as equity or debt is crucial for two reasons. First of all, the issuer can treat interest on the latter as tax-deductible in most cases, and secondly, for the investor the classification determines whether the payments received from the respective instrument is treated as a dividend or as interest. One important question in this context is how hybrid instruments are treated in the tax treaty between the source state and the residence state. It is the aim of this paper, to show how the yield on hybrid financial instruments can or must be qualified as either dividend or interest in the double tax treaties, irrespective of the treatment in contracting states.

Item Type: Paper
Keywords: Hybride Finanzierung / Doppelbesteuerungsabkommen / Internationales Steuerrecht
Classification Codes: RVK QL 530
Divisions: Departments > Finance, Accounting and Statistics > Accounting and Auditing > Betriebswirtschaftliche Steuerlehre
Departments > Volkswirtschaft
Departments > Öffentliches Recht und Steuerrecht > Österr. und Internat. Steuerrecht
Depositing User: Repository Administrator
Date Deposited: 02 Jul 2007 11:27
Last Modified: 22 Oct 2019 00:40
URI: https://epub.wu.ac.at/id/eprint/1574

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