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Taxation of Hybrid Entities under the Parent-Subsidiary Directive: The Example of the Netherlands

Taxation of Hybrid Entities under the Parent-Subsidiary Directive: The Example of the Netherlands In this article, the application of the Parent-Subsidiary Directive in respect of hybrid entities is analysed by Prof. Ton Stevens and Dr Gijs Fibbe. A distinction is made between outbound and inbound situations. In outbound situations, Member States can differ of opinion on which is the profit-generating entity: the parent company or its hybrid subsidiary. In inbound situations, where a dividend is paid to a hybrid entity, Member States can differ of opinion about the question to whom the dividend is paid: the hybrid entity or its participants. The authors describe the explicit solution in outbound situations included in Article 4, paragraph 1a, of the Parent-Subsidiary Directive. For inbound situations, such explicit provision addressing hybrid entities is missing. The authors describe how according to them the Parent-Subsidiary Directive should be applied in respect of hybrid entities in inbound situations. After a thorough analysis, they describe why in their view Member States are, for purposes of the Parent-Subsidiary Directive, no longer autonomous in the tax classification and income allocation in respect of hybrid entities established in other Member States in inbound situations. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png EC Tax Review Kluwer Law International

Taxation of Hybrid Entities under the Parent-Subsidiary Directive: The Example of the Netherlands

EC Tax Review , Volume 20 (5) – Jan 1, 2011

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Publisher
Kluwer Law International
Copyright
Copyright © Kluwer Law International
ISSN
0928-2750
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Abstract

In this article, the application of the Parent-Subsidiary Directive in respect of hybrid entities is analysed by Prof. Ton Stevens and Dr Gijs Fibbe. A distinction is made between outbound and inbound situations. In outbound situations, Member States can differ of opinion on which is the profit-generating entity: the parent company or its hybrid subsidiary. In inbound situations, where a dividend is paid to a hybrid entity, Member States can differ of opinion about the question to whom the dividend is paid: the hybrid entity or its participants. The authors describe the explicit solution in outbound situations included in Article 4, paragraph 1a, of the Parent-Subsidiary Directive. For inbound situations, such explicit provision addressing hybrid entities is missing. The authors describe how according to them the Parent-Subsidiary Directive should be applied in respect of hybrid entities in inbound situations. After a thorough analysis, they describe why in their view Member States are, for purposes of the Parent-Subsidiary Directive, no longer autonomous in the tax classification and income allocation in respect of hybrid entities established in other Member States in inbound situations.

Journal

EC Tax ReviewKluwer Law International

Published: Jan 1, 2011

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