Taxation of derivatives

Resource Information

The work Taxation of derivatives represents a distinct intellectual or artistic creation found in International Bureau of Fiscal Documentation. This resource is a combination of several types including: Work, Language Material, Books.

Label

Taxation of derivatives

Creator

• Weidmann, O

Subject

• hedging transaction
• dividend stripping
• accounting
• beneficial ownership
• GAAR
• derivative financial instrument
• tax arbitrage

Language

eng

Summary

The exploding use of derivatives since the turn of the century has created a major challenge for tax authorities, who had to develop appropriate derivatives taxation rules that strike a balance between allowing capital markets to function effectively by removing artificial tax barriers and at the same time protecting their countries' tax base from tax avoidance schemes that utilise these instruments. Derivatives exist in a vast variety and complexity and new forms or combinations of existing forms appear ad hoc as new risk categories emerge and companies seek to invest in or hedge these risks. This book discusses and analyses taxation issues posed by derivatives used in domestic as well as in cross-border transactions. In great detail the author presents approaches that can be adopted by tax legislators to solve these problems, clarifying her solutions with specific reference to components of the two most important domestic tax systems in relation to derivatives in Europe, those of the United Kingdom and Germany. Examples of derivatives transactions and arbitrage schemes elucidate the nature of derivatives and how they can be effectively taxed. The following aspects of the subject and more are covered: - basic economic concepts in the context of derivatives such as replication, put-call-parity, hedging and leverage; - designing a suitable definition of derivatives in domestic tax law; - achieving coherence in domestic tax rules by applying a 'special regime approach' versus an 'integrative approach' and the distinction of income and capital, equity and debt; - alignment of accounting standards and taxation rules and the application of fair value accounting for tax purposes; - how to tax hedged positions and post-tax hedging schemes; - taxation of structured financial products and hybrid instruments with focus on bifurcation and integration approaches and the recent BEPS discussion drafts on hybrid mismatch arrangements; - refining the 'beneficial ownership' concept in domestic law and in tax treaties and an analysis of recent case law; - withholding taxes in the context of domestic and cross-border dividend tax arbitrage schemes; and, - tackling derivatives tax arbitrage effectively in anti-avoidance legislation

Geographic coverage

International

Index

no index present

Language note

English

Literary form

non fiction

Series statement

Series on international taxation

Series volume

52