Hybrid Entities in Tax Treaty Law

S. 5561. Structure of the chapter

This chapter examines the treatment of hybrid entities under the current version of the Merger Directive (also the Directive). This chapter is divided into two main parts composed of sections 2. and 3. The first part is an analysis of some of the provisions that are particularly relevant for determining the tax treatment applicable to hybrid entities under the Directive. The second part provides some practical examples of the application of the Directive in various situations involving hybrid entity mismatches.

The first part (section 2.) will start with some insights on the personal scope of the Directive. The purpose is to determine whether and, as the case may be, to what extent hybrid entity mismatches can preclude the application of the Directive to a reorganization on the grounds that the latter will fall outside of the personal scope. This is the first step towards the analysis of hybrid entities as, if the conditions of the personal scope are not met, the other provisions of the Directive would become irrelevant. Having done that, section 2.2. will provide for an analysis of the specific provisions regarding hybrid entities. First, this part will provide som...