Tax Arbitrage through Cross-Border Financial Engineering

This book - the foremost comprehensive analysis of a key topic that is currently engaging international organizations and tax authorities worldwide - explores tax arbitrage opportunities ensuing from financial engineering techniques with cross-border financial instruments, making use of complex types of arrangements such as hvbrids, synthetics, and non-traditional financial instruments, which are able to meet the criteria fora favourable tax treatment in multiple jurisdictions. Leading to an international tax planning framework, the book covers pivotai arbitrage potentiating matters arising under tax treaties and EU law. including the following: - factors that determine the characterization of income under OECD, UN and US income tax model conventions as well as EU Directives, namely in thin cap settings; - EU law on the denial of tax benefits and cross-border tax arbitrage; - the debt-equity divide and the vital fictions of the income tax system; - admissibility of international tax arbitrage; - building on finance theory, accounting and regulatory rules; and - notes on OECD BEPS and arm's length intra-group finance. The author also plunges into the beguiling debate on economic substance versus legal form, examining the role of the expected-return taxation theory. A comparative analysis of relevant developments in a number of jurisdictions - including Australia, Belgium, Brazil, Luxembourg, Portugal, the United Kingdom and the United States - shows the merits and shortcomings of the diverse approaches taken. Squarely confronting the tax and business issues at stake, the author proposes an objective benchmark for the taxation of financial instruments to achieve greater international tax neutrality, ultimately promoting global wealth. His well based and time-resistant considerations, categorizing inconsistencies and weighing the tax consequences of legislative options already in place, will be of great value to tax administrations and taxpayers alike. In addition, the cross-border tax arbitrage frame here established will serve as a practical tool for both multinationals and advisers to financial operations.