IOTA Case Study Workshop on Tackling BEPS hybrid mismatch structures through the application of anti-abuse rules (GAAR, PPT or the anti-hybrid mismatch rules from the ATAD)

The European Anti-Tax Avoidance Directives (ATAD) aim to address aggressive fiscal structures. The rules for combating hybrid mismatches have come into force in several stages. In response, multinationals have significantly reorganised their tax strategies. These rules are particularly complex and require a good understanding of the tax laws of other countries that lead to hybrid outcomes.

The objective of this Workshop was to enhance understanding of how multinationals, since the introduction of the anti-hybrid mismatch rules, proposed by the OECD BEPS project and implemented by the EU ATAD, may still utilise certain hybrid legal structures or arrangements. Additionally, the event examined the various legal grounds that tax authorities may use to address hybrid mismatch outcomes (double non-taxation, double deduction, or deduction/non-inclusion) related to these structures.

During the two-day Workshop, selected case studies from IOTA member tax administrations, such as Austria, Belgium, Italy, Norway, and Sweden, were presented. These case studies aimed to showcase various hybrid structures encountered in different jurisdictions, and the approaches taken by the respective tax authorities to address these structures have also been discussed.

On the first day of the Workshop, participants examined the case studies from Austria, Norway, and Sweden. These cases were discussed in smaller breakout sessions, allowing participants to share their views, ideas, and experiences regarding anti-hybrid mismatch structures. The following member countries presented case studies to the plenary:

• Belgium: Daan Verhaegen, (introductory presentation);
• Sweden: Maria Hamrin & Emma Barrögård;
• Austria: Horst Rinnhofer;
• Norway: Ingrid Birgitte Lund.

The second day of the IOTA Case Study Workshop showcased another group of insightful presentations. Workshop participants continued the discussion on the Norwegian case and became acquainted with case studies from IOTA member countries of Belgium and Italy. Presentations particularly focused on an investment fund structure (Norway), on a hybrid mismatch structure, using an intermediate holding company and taking into consideration the potential impact of historic hybrid mismatch structures on later tax years (when the hybrid structure no longer exists) – Belgium, and on the Maquiladora Tax Regime in Mexico and Permanent Establishment Mismatches (Italy). The following member countries presented case studies to the plenary:

• Norway: Ingrid Birgitte Lund, (continued);
• Belgium: Daan Verhaegen;
• Italy: Rosario Mascolini.

As on the previous day, each case was discussed in smaller groups where participants collaborated on key issues in the cases, and explored approaches, benefits, opportunities, and potential challenges for each individual case.  All the materials, presentations, and photo gallery are now available online on the event’s webpage. This event was facilitated by IOTA International Taxation Expert Alexandros Roukalis, with support from his colleague Ivana Donchevska.