Hybrid Mismatch Rules

Overview

• The objective of the hybrid and other mismatches legislation – to counteract tax mismatches that arise as a result of cross-border arrangements by altering the tax treatment of the payment/receipt
• Overview of the eight chapters in TIOPA 2010 Part 6A
• What is a mismatch, and what ‘arrangements’ are caught by the rules?
• Explanation of the key definitions of the legislation

Hybrid Entities: Chapters 5 & 7

• Deduction non-inclusion mismatches
• The conditions
• Counteraction of a mismatch

Hybrid Entities: Chapter 9

• Double deduction mismatches
• The conditions
• Counteraction of a mismatch
• Dual inclusion income and deemed dual inclusion income
• Further considerations

Permanent Establishments

• Deduction non-inclusion mismatches - chapter 6
• The conditions
• Counteraction of a mismatch

Double Deduction Mismatches – Chapter 10

• The conditions
• Counteraction of a mismatch
• Dual resident companies – chapter 10

Compliance

• CT600B and practical points

Examples will include mismatches that arise as a result of:

• A hybrid instrument
• A hybrid entity, both where it is the payer and also the recipient
• A hybrid entity, resulting in a double deduction
• A permanent establishment or a dual resident company

For each example, we will consider whether the mismatch needs to be counteracted and how.

Redcliffe's trainer for the Hybrid Mismatch Rules course is a seasoned Chartered Accountant and Chartered Tax Adviser with over 25 years of experience in both practice and industry across various tax roles focusing on corporate and international tax.

Transitioning into professional education in 2008, she has worked for tax tuition providers and also led the in-house technical training team of a large accountancy firm for several years. As a result, she has extensive experience designing and delivering tax programs for firms and clients that are both practical and commercially relevant.

Over several years, she has also established a strong relationship with CIOT and contributed to their working party on the future of the CTA qualification to ensure it remains relevant.

The trainer currently provides training for professional qualifications and Continuing Professional Development (CPD), such as corporate tax updates, helping tax professionals stay current with the ever-evolving and increasingly complex world of corporate and international taxation.

By the end of this course, participants will be able to:

• Identify when a hybrid mismatch may arise
• Recognise the relevant chapter of the legislation that is applicable
• Determine if a mismatch exists and if it needs to be counteracted
• Quantify the counteraction and identify other relevant legislation that may have an impact
• Understand the compliance obligations surrounding the hybrid and other mismatch legislation

• This course will be learner-centric rather than lecture-based so that attendees will learn by doing. Please be prepared to participate!
• Attendees will have plenty of opportunity to ask questions of each other and the trainer to gain as much knowledge as possible.
• It is highly practical and will involve considering conditions in the legislation to determine if they are applicable.

Our hybrid mismatch rules course is suitable for:

• Tax professionals who prepare tax computations for or advise companies with cross-border arrangements (broadly, intra-group or third-party transactions, e.g. interest, royalties, recharges)
• In particular, it may be relevant for attendees who deal with US parented groups that typically make the ‘check the box’ election, and/or multinational companies with permanent establishments in other jurisdictions

The hybrid mismatch rules were introduced as part of the OECD’s Base Erosion and Profit Shifting action plan to counteract tax mismatches that may arise as a result of a cross-border transaction.

This course focuses on the most common tax mismatches - those that arise as a result of transactions using a hybrid instrument (e.g. convertible bonds), involving a hybrid entity (e.g. a partnership) and also payments made by a permanent establishment or dual resident company.

It will look at examples of deductions with non-inclusion income (DNI) and also double deduction (DD) examples.