Hybrid Financial Instruments, Double Non-Taxation and Linking Rules

Abstract

Double non-taxation stemming from hybrid financial instruments and the solutions provided by the OECD and the European Union for tackling such an outcome are the target of this thesis. This research project focuses on the economic and legal features of debt and equity instruments as well as hybrid financial instruments from an interdisciplinary perspective where economics, corporate law, financial accounting law, regulatory law and tax law are present. The different qualification of hybrid financial instruments within and without jurisdictions may lead to double non-taxation across borders, which is one of the main issues of concern to the international tax community. This thesis also pays particular attention to the concept and nature of double non-taxation as an outcome of exercises of sovereignty, its role within the international tax debate, and different concepts related to mechanisms that facilitate achieving such an outcome from a state perspective (i.e. tax competition) and a taxpayer perspective (i.e. tax planning, tax avoidance and the misleading concept of aggressive tax planning). Lastly, this thesis analyses the initiatives released by the OECD and the European Union and the measures for tackling double non-taxation stemming from hybrid financial instruments: linking rules. A previous analysis of the technical details of linking rules allows better assessing their compatibility with specific provisions laid down in particular tax treaties as well as with EU Primary law