Tax treatment of interest for corporations:
Gespeichert in:
| Weitere beteiligte Personen: | |
|---|---|
| Format: | Buch |
| Sprache: | Englisch |
| Veröffentlicht: |
Amsterdam
IBFD
2012
|
| Schlagwörter: | |
| Links: | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=027152351&sequence=000003&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=027152351&sequence=000004&line_number=0002&func_code=DB_RECORDS&service_type=MEDIA |
| Umfang: | XIV, 246 S. graph. Darst. |
| ISBN: | 9789087221621 |
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Datensatz im Suchindex
| _version_ | 1819248170659479552 |
|---|---|
| adam_text | Table
of
Contents
Preface v
Chapter
1:
Introduction
1
Otto
Marres and
Roei Monteiro
Chapter
2:
The Debt/Equity Distinction in Corporate
Taxation: Does It Work, Does It Matter?
5
Henk Vording
2.1.
Introduction
5
2.2.
Equity and debt: Unequal tax treatment
5
2.3.
The problem: Economic distortions or outward tax
planning?
7
2.3.1.
Economic distortions?
7
2.3.2.
Outward tax planning?
10
2.3.3.
Empirical findings
12
2.3.4.
Welfare effects?
15
2.3.5.
Conclusion: Modest distortions, but potentially
big political issues
17
2.4.
Possible solutions
17
2.4.1.
Tax treatment of intra-group lending and
borrowing
18
2.4.2.
Clarify the concepts?
18
2.4.3.
Change the tax treatment of debt and/or equity?
20
2.5.
Conclusion
22
Chapter
3:
The Debt-Equity Conundrum
-
A Prequel
23
Peter H. Blessing
3.1.
Background
23
3.1.1.
Ingenerai
23
3.1.2.
Current impetus for review
24
3.2.
Overview of issuer and holder income tax consequences
of debt versus equity and the consequent debt bias
25
3.2.1.
Consequences at the issuer level for domestic
payments
25
3.2.2.
Consequences at the holder level for domestic
payments
26
3.2.3.
Differences where payments are cross border
27
VU
Table
of contents
3.2.4.
Occasional issuer preference for equity treatment
29
3.3.
Commercial setting of debt-equity distinctions
29
3.3.1.
Capital structure of corporation
30
3.3.1.1.
General considerations and sensitivity
to WACC
30
3.3.1.2.
Leveraged acquisitions
30
3.3.2.
Erosion of distinctions in legal rights in the
financial marketplace
31
3.3.3.
External and internal sources of funding
32
3.3.4.
Alternative financing transactions
32
3.3.5.
Debt-equity distinction in a bankruptcy context
33
3.4.
Effect of various aspects of tax system on form of
capitalization
33
3.4.1.
Classification of debt and equity
33
3.4.1.1.
General approaches under domestic law
34
3.4.1.2.
Instruments with hybrid characteristics
35
3.4.1.3.
Tax administrative actions to reclassify
instruments
36
3.4.2.
Cross-border
hybridity
36
3.4.2.1.
Ingenerai
37
3.4.2.2.
Instruments, vehicles and transactions
designed to have a different
classification internationally
38
3.4.3.
External tax-favoured sources of funding
39
3.4.4.
Alternative pass-through entities
39
3.4.5.
Other
40
3.5.
Evidence and trends regarding tax bias towards use of debt
40
3.5.1.
Empirical evidence
40
3.5.1.1.
After-tax cost of capital by region
40
3.5.1.2.
Correlation of
CIT
and leverage
41
3.5.2.
Trends
42
3.5.3.
Concern regarding possible negative aspects of
debt bias in light of trends
43
3.6.
Historical and legal basis of debt-equity distinction
43
3.7.
Economic and corporate finance perspectives on
debt-equity
47
3.7.1.
Contrast from legal perspective
47
3.7.2.
Application of economic principles to legal
analysis
48
3.7.3.
Possible economic explanations to justify tax law
debt bias
49
Vili
Table
of contents
3.8.
Tax policy considerations relating to debt-equity
distinction in cross-border financings
50
3.9.
Possible government responses to the interest
deductibil
ity issue within a bimodal debt-equity framework
53
3.9.1.
Introductory remarks
53
3.9.2.
Thin capitalization rules
(reclassification
and/or
earnings stripping rules)
54
3.9.3.
Defining debt deductibility by reference to
finance theory
56
3.10.
Possible government responses to the interest
deductibility issue that depart from the bimodal framework
57
3.10.1.
Introductory remarks
57
3.10.2.
No deduction for debt or equity capital
57
3.10.3.
No deduction for dividends or interest but
allowance for cost of capital
58
3.10.4.
Deduction for interest but not dividends and
allowance for equity capital
59
3.10.5.
Deduction for dividends and interest
60
3.11.
Conclusions
61
Chapter
4:
Interest Costs Allocation: A Business View
63
Theo
Ke
ijzer
4.1.
Introduction
63
4.2.
Why is interest deduction important?
64
4.3.
What are the solutions?
65
4.4.
Conclusions
67
Chapter
5:
Notional Interest Deduction
69
Bernard Peeters and Thomas
Hermie
5.1.
Introduction
69
5.2.
Objectives
70
5.2.1.
Lowering the corporate income tax rate and
strengthen the competitiveness of Belgium
70
5.2.2.
Enhance and increase the equity of Belgian
companies
73
5.2.3.
Keep the residual coordination centres in Belgium
75
5.3.
The law
76
5.4.
The European dimension
78
5.5.
Economic impact
81
5.6.
Cost
82
IX
Table
of contents
5.7.
Abuse
84
5.8.
Future
88
Annex: Belgian Income Tax Code provisions dealing with
the
NID
89
Chapter
6:
The Concept of Interest in Tax Treaties
93
Hans
Pijl
6.1.
Introduction
93
6.2.
Interest in the
OECD
Draft and Model Conventions
96
6.2.1.
The
1963
interest definition
96
6.2.2.
The
1977
interest definition
97
6.2.3.
Hybrid debts
99
6.3.
Interest in the European Directives
102
6.4.
Islamic finance and the
OECD
Model
104
6.5.
Carried interest
110
6.6.
Conclusion
114
Chapter
7:
Thin Capitalization in Brazil
115
Paulo Roberto
Coimbra
Silva
7.1.
Introduction
115
7.2.
What is thin capitalization?
115
7.3.
The different approaches to thin capitalization by
countries: Different methods and techniques for dealing
with the topic
117
7.4.
The current Brazilian scenario
118
7.5.
Thin capitalization rules in Brazil
122
Chapter
8:
Earnings Stripping
125
Stephan Eilers
8.1.
Development of anti-earnings stripping rules in Germany
125
8.2.
Interest limitation
{Zinsschranke) 126
8.2.1.
Overview
127
8.2.2.
Exceptions to the limitation on the tax
deductibility of interest
128
8.2.2.1.
Exempt threshold of EUR
3
million
128
8.2.2.2.
Companies not affiliated with a
company group (stand-alone-clause)
128
Table
of contents
8.2.2.3.
Proof of adequate equity capital ratio
(escape clause)
130
8.2.3.
Special hurdles for shareholder-financed
corporations
133
8.2.3.1.
Corporations that are not affiliated with
a group
133
8.2.3.2.
Corporations that are affiliated with a
group
134
8.2.4.
Interest limitation test
135
8.3.
Practical questions
136
8.3.1.
Escape clause (section 4h(l)(c)
ITA;
section 8a(3)
СТА)
136
8.3.2.
Deduction of book value of shares
(section 4h(2) lc) sent.
5 ITA) 136
8.3.3.
EB1TDA carry-forward
136
8.3.4.
IFRS
137
8.4.
Evaluation of the interest limitation
137
8.5.
What to do about it?
138
Chapter
9 :
Regime on Danish Interest Deductions
141
Nikolaj
Bj0rnholm
9.1.
Regime on Danish interest deductions
141
9.1.1.
Thin capitalization regime
141
9.1.1.1.
Controlled debt (Condition
1) 143
9.1.1.2.
Debt threshold (Condition
2) 144
9.1.1.3.
Debt-to-equity ratio (Condition
3) 144
9.1.1.4.
No matching debt available
(Condition
4) 145
9.1.2.
Limitation on financial expenses regime (asset
and
EBIT
limitation rules)
145
9.1.2.1.
The asset limitation rule
147
9.1.2.2.
The
EBIT
limitation rule
149
Chapter
10:
The Case for Withholding Tax on a Net Basis
within the
EU 151
Robert van
der Jagt
10.1.
Introduction
151
10.2.
Taxation on a net basis
—
Background information and
underlying problem
152
Xl
Table
of contents
10.3.
Differences in the tax treatment of residents and non¬
residents
154
10.3.1.
Difference in treatment with respect to the nature
of the tax burden
154
10.3.2.
Difference in treatment with respect to the tax
rate
155
10.3.3.
Difference in treatment with respect to the
applicable tax base
155
10.4.
Infringement of fundamental freedoms
156
10.4.1.
The case of a recipient company that offsets only
a portion of its tax credits
158
10.4.2.
The case of a recipient company in a loss situation
161
10.5.
Potential obstacles to taxation on a net basis
164
10.6.
Taxpayers resident in non-EU Member States (third
countries)
165
10.7.
Summary and conclusion
167
Chapter
11:
Corporate Tax Treatment of Interest:
EU
State
Aid and the
EU Code
of Conduct Combating
Harmful Tax Competition
169
Vinod Kalloe
11.1.
EU
harmful tax competition and the corporate tax
treatment of interest
169
11.1.1.
EU
Code of Conduct for business taxation
169
11.1.2.
EU
State aid provisions
173
11.1.3.
Interaction of
EU
Code of Conduct and
EU
State
aid proceedings
175
11.2.
Case law on corporate tax treatment of interest
176
11.2.1.
Generic corporate tax measures
177
11.2.2.
Group coordination or holding regimes
182
11.2.3.
Tax measures specifically related to (group)
interest
188
11.2.4.
Financing conduit companies
193
11.2.5.
Financing branches
196
11.2.6.
Informal capital: Notional interest deduction
197
11.2.7.
Hybrid financing arrangements
199
11.3.
Conclusion
202
xii
Table
of contents
Chapter
12:
Thin Capitalization Rules: The ECJ Approach
205
Eric Ginter
12.1.
Introduction
205
12.2.
Under-capitalization and freedom of establishment
206
12.3.
Limits imposed by the Court on the powers of Member
States
208
Chapter
13:
Tax Treatment of Interest for Corporations
215
Roe l
Monteiro
and Marieke Koerts
13.1.
Introduction
215
13.2.
Panel
1:
Debt versus equity
215
13.2.1.
Economic perspective
—
Different fiscal
treatment of debt and equity
215
13.2.2.
Interest policy
216
13.2.3.
Notional interest deduction: The Belgian
experience
217
13.2.4.
Defiscalization of group interest
219
13.3.
Panel
2:
Allocation of taxing rights
222
13.3.1.
Source versus residence
222
13.3.2.
Scheuten
Solar— Interest deduction rules vs the
Interest and Royalty Directive
224
13.3.3.
Article
9
OECD/EU Arbitration Convention
225
13.3.4.
Article
11
OECD
Model and the Interest and
Royalty Directive
227
13.4.
Panel
3:
Base erosion through interest payments
—
National and
EU
approaches
229
13.4.1.
Thin cap rules
-
Why (not)?
229
13.4.2.
Earnings stripping: The German approach
230
13.4.3.
Specific anti-avoidance rules in Denmark
231
13.4.4.
Erosion of the CCCTB
233
13.5.
Panel
4:
EU
law and interest payments
235
13.5.1.
Withholding tax on interest payments and
EU
free movement
236
13.5.2.
State aid and the Code of Conduct for harmful
tax competition
239
13.5.3.
Anti-base erosion measures and
EU
free
movement
240
13.6.
Final remarks
246
Xlii
Tax Treatment of I nterest
for Corporations
The tax treatment of interest for corporations continues to
engage both tax academics and tax practitioners. In Tax Treatment
of interest for Corporations various aspects of this matter
(interest deduction limitations, discriminatory treatment of equity
versus debt, preferential tax regimes on group interest income
and withholding tax on interest) are dealt with from different
perspectives, including economics, tax policy, comparative law,
and
EU
and international law.
Prominent practitioners and academics give their views on the tax
treatment of interest. Subjects discussed are:
—
The debt/equity distinction in corporate taxation from a legal
and economic perspective
—
СВІТ
(comprehensive business income tax) versus ACE
(allowance for corporate equity)
—
The concept of interest in tax treaties
—
The notional interest deduction (Belgium)
—
Thin capitalization in Brazil
—
Earnings stripping (Germany)
—
Interest deduction in Denmark
—
Withholding tax on interest within the
EU:
gross or net?
—
Thin cap rules from an
EU
perspective
—
EU
State aid and the
EU Code
of Conduct combating harmful
tax competition
—
ACTL conference report on tax treatment of interest
corporations
Tax Treatment of Interest for Corporations is a unique combination
of academic and practical discussions of economic and policy
issues, domestic legislation,
EU
law and tax treaty law.
Contributors:
Nikolaj
Bjtrnhołm,
Peter Btessing,
Stephan Eifers,
Eric Ginter, Thomas
Hermie,
Robert van
der Jagt,
Vinod
КаІІое,
Theo
Keijzer, Marieke Koerts, Otto
Marres,
Roei Monteiro,
Bernard Peeters, Hans
Pijl,
Paulo Roberto
Coimbra
Silva, Henk Vording.
IBFD
|
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| genre | (DE-588)1071861417 Konferenzschrift gnd-content |
| genre_facet | Konferenzschrift |
| id | DE-604.BV041705024 |
| illustrated | Illustrated |
| indexdate | 2024-12-20T16:53:05Z |
| institution | BVB |
| isbn | 9789087221621 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-027152351 |
| oclc_num | 824670236 |
| open_access_boolean | |
| owner | DE-703 |
| owner_facet | DE-703 |
| physical | XIV, 246 S. graph. Darst. |
| publishDate | 2012 |
| publishDateSearch | 2012 |
| publishDateSort | 2012 |
| publisher | IBFD |
| record_format | marc |
| spellingShingle | Tax treatment of interest for corporations Unternehmensbeteiligung (DE-588)4140723-4 gnd Steuer (DE-588)4057399-0 gnd |
| subject_GND | (DE-588)4140723-4 (DE-588)4057399-0 (DE-588)1071861417 |
| title | Tax treatment of interest for corporations |
| title_auth | Tax treatment of interest for corporations |
| title_exact_search | Tax treatment of interest for corporations |
| title_full | Tax treatment of interest for corporations ed. by Otto Marres ... |
| title_fullStr | Tax treatment of interest for corporations ed. by Otto Marres ... |
| title_full_unstemmed | Tax treatment of interest for corporations ed. by Otto Marres ... |
| title_short | Tax treatment of interest for corporations |
| title_sort | tax treatment of interest for corporations |
| topic | Unternehmensbeteiligung (DE-588)4140723-4 gnd Steuer (DE-588)4057399-0 gnd |
| topic_facet | Unternehmensbeteiligung Steuer Konferenzschrift |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=027152351&sequence=000003&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=027152351&sequence=000004&line_number=0002&func_code=DB_RECORDS&service_type=MEDIA |
| work_keys_str_mv | AT marresocr taxtreatmentofinterestforcorporations |