Hybrid Entities in Tax Treaty Law
1. Aufl. 2020
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S. 721. Setting the Scene: US international tax issues regarding hybrid entities
Throughout its tax treaty history, the United States of America (US) has entered into more than 50 Double Tax Conventions (DTCs) with foreign jurisdictions. In doing so, the US has followed its own tax treaty policy and has developed its own Tax Model Convention (US Model) as its individual instrument for DTC negotiation. The current version of the US Model is the 2016 US Model, which replaced the previously in-force 2006 US Model.
During the development of its tax treaty policy, the US has acknowledged the possibility of the improper use of a DTC and has addressed it in its tax treaty practice. In this regard it has been stated that:
“The US is concerned about the improper use of a DTC. In order to prevent abuse, the US attaches great importance to restrictions on the entitlement to the benefits of the DTC. Given this concern as well as other issues, the US published its own Model Tax Convention (…) The US uses this model in its bilateral negotiations. Thus, many DTCs concluded by the US in recent years contain many similarities.” (…)
Nonetheless, multiple cases of hybrid mismatches have arisen in the US deriv...