This dissertation aims to provide a comprehensive overview of the taxation of investment derivatives and the relationship between the derivatives and the accrual and realization methods. Investment derivatives, such as convertible bonds, include an initial investment and a derivative (an option) to buy or sell or to participate in the value movements of some underlying property.

The principal focus of this study is on three universal tax issues, namely valuation, timing and the taxation of unrealized gains.

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While this study does not deal with individual tax treaties or bilateral transactions, the OECD Model is scrutinized in order to highlight the underlying principles of the given recommendations, especially with respect to interest income and capital gains. Due to the increasing importance of IFRS rules in accounting, the study is not limited to tax law, but also looks at issues from the perspective of finance, accounting and economics.

• Chapter One: Introduction
• Chapter Two: Financial instruments
• Chapter Three: Conceptual framework for the study
• Chapter Four: Tax framework for the study
• Chapter Five: Accounting and financial derivatives
• Chapter Six: Specific tax issues for financial derivatives
• Chapter Seven: Tax treatment of investment derivatives
• Chapter Eight: Discussion on investment derivatives and principal tax issues
• Chapter Nine: Final remarks

Antti Laukkanen received a Master of Science (Economics) degree in accounting and finance from the Helsinki School of Economics in 1993 and a Licentiate of Science in taxation in 2000. While working on his thesis, he was a trainee and a visiting scholar at the IBFD in 1999 and 2005, respectively, and a visiting scholar at the University of Michigan Law School in 2005. Mr Laukkanen’s areas of interest include accounting and controlling as well as international taxation. Professionally he has held various controller and management positions in several companies in the Nordic region.

The mission of the International Bureau of Fiscal Documentation is: “[T]o maintain a knowledge centre providing information about and explanations of international taxation and promoting the study of taxation in general” (Art. 2 of the articles of association). True to this mission, and aware that access to doctoral theses is often limited, IBFD has taken the initiative to make available to a wider public a series of books based on doctoral research, meeting the highest academic standards.

Only contributions that enhance the international academic tax debate are accepted. In order to ensure high quality, every thesis published in this series has been reviewed by academic members of the Board of Trustees, senior IBFD research staff or prominent tax academics worldwide. The series aims to cover all aspects of comparative and international taxation, not only in respect of income tax, but also in respect of VAT and of inheritance, estate and gift taxes.