Classification and Treatment of Hybrid Financial Instruments and Income Derived Therefrom under EU Corporate Tax Directives – Part 2

In this two-part article, the author addresses the application of EU tax directives to hybrid financial instruments. In Part 1, the applicability of the Parent-Subsidiary Directive and the Interest and Royalties Directive was analysed. In Part 2, unilateral measures of Member States to combat cross-border arbitrage are discussed. Moreover, Part 2 contains an analysis of the fulfilment of the holding requirements under the directives and the application of the Arbitration Convention.