Hybrid mismatches and hybrid financial instruments – The (in)compatibility of Article 15 bis 1 CITL with EU Law and tax treaties

Premio AEDAF en su XXIII edición, en la modalidad de DOCENTE INVESTIGADOR

Abstract

The Corporate Income Tax Law now lays down a recent provision, Article 15 bis CITL, which deals with certain double non-taxation outcomes stemming from the use of hybrid financial instruments, hybrid entities and hybrid Permanent Establishments in a cross-border context. The analysis of this Article is not only highly relevant from a technical perspective, but also due to the likely incompatibility of some of its rules with the EU Fundamental Freedoms and with the non-discrimination clauses laid down in Spanish tax treaties, particularly the one related to hybrid financial instruments. This contribution provides a technical analysis of Article 15 bis 1 CITL and the incompatibilities that may arise from its application.