- Assessor: Professor Jakob Bundgaard, Aalborg University
- Leader of the assessment: Deputy Head of Department, Associate Professor Anders Løvlie, University of Oslo
- Supervisor: Professor Arvid Aage Skaar, University of Oslo
About the dissertation
The research question is to what extent tax planning based on different legal systems can be used to reduce overall taxation. More specifically put, how can multinational corporations take advantage of hybrid structures in order to reduce overall taxation.
It is a well-known fact that there are no coincidences in the structure of multinational corporations, and that these corporations has substantial reductions in tax liability as a result. The research question is therefore highly relevant as proposed changes in tax legislation is currently being implemented in many jurisdictions in the EU/EEA area.
Hybrid structures are entities and financial instruments that exploit differences in tax law in two or more jurisdictions to obtain tax benefits. In order to label a structure as a hybrid, a cross-border element has to be present. Hybrid structures can take different forms. They can either be composed of entities treated differently for tax purposes by two or more jurisdictions (i.e. hybrid entities), therefore allowing tax benefits, for instance double non-taxation. Alternatively, the corporation can utilise financial instruments composed in a way that enables for instance double deductions or non-taxation (i.e. hybrid financial instruments, or payments under such instruments, that lead to different tax treatment in two jurisdictions). Sophisticated hybrid structures are often composed of both hybrid entities and hybrid financial instruments. Such structures are often difficult to unveil, as they are massive and complicated, in the sense that they employ a large number of entities as well as different financial instruments.
The OECD has proposed 15 Actions to combat base erosion and profit shifting, where Action 2 is named "Neutralising the Effects of Hybrid Mismatch Arrangements". The Action contains rules referred to as anti-hybrid rules, aimed at preventing mismatches in taxation that arise from the hybrid structure described above. The thesis analyse these rules form an EU/EEA law perspective and discuss if the rules are in compliance with primary EU/EEA law, specifically the freedom of establishment and the free movement of capital and payments. The result of this analysis will form the basis for a conclusion on the research question.