Pillar Two: Flow-Through Entities (Part 2): Reverse Hybrids – New York Office Snippet

Loyens & Loeff New York regularly posts 'Snippets' on a range of EU tax and legal topics. This Snippet describes the treatment of reverse hybrid entities under Pillar Two.

P2 applies to all entities that form part of a multinational group with annual revenues of at least €750M. This includes entities that are treated as transparent for local tax purposes. P2 uses the term Flow-Through Entities (FTEs) for entities that are fiscally transparent in the jurisdiction in which they are created. P2 contains two types of FTEs, depending on the treatment in the jurisdiction of its owners: (i) Tax Transparent Entities (TTEs) and (ii) Reverse Hybrid Entities (RHEs):

• If the FTE is treated as transparent by its owner, it is a TTE.