Hybrid Financing Arrangements Under The GLOBE Rules

Michiel Schul and Steffie Klein, members of our Tax team, have made a significant contribution to Tax Notes International. In their insightful article, they describe hybrid financing arrangements and mismatches between tax systems under the global anti-base-erosion model rules and provide illustrations of how these rules function.

In the article, we describe the treatment of certain hybrid financing arrangements (HFAs) under the OECD's global anti-base-erosion (GLOBE) model rules. We consider the consolidated commentary to the GLOBE rules and examples appended to the GLOBE rules as published on the date of this article's writing. We focus on the relevance of these rules to U.S. multinational enterprises in scope of the GLOBE rules with financing arrangements involving their European subsidiaries and illustrate how the rules work with some practical examples. We first describe how hybrid mismatches between the tax systems of countries are dealt with under the EU