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At Last, Some Output on the Fight against Double Non-taxation

At Last, Some Output on the Fight against Double Non-taxation ec Editorial TAX REVIEW 2014­6 Luc De Broe* 1 WHY DID IT TAKE SO LONG? In the aftermath of the crisis and the resulting budgetary impact, a global fight against so-called aggressive tax planning has emerged. The overarching theme of these actions seems to be a desire to tackle double nontaxation, which is perceived as undesirable from a policy perspective, as it (arguably) affects tax revenues, distorts competition, causes economic efficiency and hampers transparency and fairness. One of the double non-taxation structures causing great concern are hybrid financial instruments. These are financial instruments for which at least two jurisdictions take mutually incompatible positions regarding the qualification of this instrument, so that a deductible payment of the payer is not treated as taxable income of the payee (deduction/non-inclusion). Not surprisingly, the OECD and European Commission have (both) taken initiatives to counter such hybrid financial instruments. The fact that such structures can also give rise to double taxation is largely ignored in these initiatives. It is striking that, given the apparent need to counter double non-taxation caused by inter alia hybrid financial instruments, it has taken such a long time before any actual measures have emerged. On an EU level, http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png EC Tax Review Kluwer Law International

At Last, Some Output on the Fight against Double Non-taxation

Broe
EC Tax Review , Volume 23 (6) – Nov 1, 2014
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Kluwer Law International
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Copyright © Kluwer Law International
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0928-2750
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Abstract

ec Editorial TAX REVIEW 2014­6 Luc De Broe* 1 WHY DID IT TAKE SO LONG? In the aftermath of the crisis and the resulting budgetary impact, a global fight against so-called aggressive tax planning has emerged. The overarching theme of these actions seems to be a desire to tackle double nontaxation, which is perceived as undesirable from a policy perspective, as it (arguably) affects tax revenues, distorts competition, causes economic efficiency and hampers transparency and fairness. One of the double non-taxation structures causing great concern are hybrid financial instruments. These are financial instruments for which at least two jurisdictions take mutually incompatible positions regarding the qualification of this instrument, so that a deductible payment of the payer is not treated as taxable income of the payee (deduction/non-inclusion). Not surprisingly, the OECD and European Commission have (both) taken initiatives to counter such hybrid financial instruments. The fact that such structures can also give rise to double taxation is largely ignored in these initiatives. It is striking that, given the apparent need to counter double non-taxation caused by inter alia hybrid financial instruments, it has taken such a long time before any actual measures have emerged. On an EU level,

Journal

EC Tax Review – Kluwer Law International

Published: Nov 1, 2014

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