ATOZ & Legitech briefing - Hybrid Mismatch Rules & the Reverse hybrid mismatch rule - Cutting through complexity

ATOZ & Legitech briefing

On 16 March 2023, our Tax Partner and Head of Transfer PricingOliver R. Hoor, in partnership with Legitech, will be hosting a briefing looking at the Hybrid Mismatch Rules.



Hybrid mismatches typically originate from a different tax treatment of an entity, a permanent establishment or a financial instrument under the laws of two or more jurisdictions and may result in deduction without inclusion or double deduction outcomes. In general, the hybrid mismatch rules target hybrid mismatches between associated enterprises, structured arrangements between third parties, imported hybrid mismatches and tax residency mismatches.

At the same time, the hybrid mismatch rules should not create economic double taxation. This is ensured through a number of carve-outs and limitations that discharge the application of the hybrid mismatch rules (for example, timing differences, inclusion of the payment at the level of any payee, tax exempt status of the investor, transfer pricing adjustments).

This briefing aims at providing participants with a clear overview of the hybrid mismatch rules and the reverse hybrid mismatch rule (the scope of which has been clarified recently), analyses how these rules may impact Alternative Investments in Luxembourg and considers opportunities to manage adverse tax consequences in practice.



  1. Introduction
  2. Hybrid mismatch rules
  • Mismatch outcomes
  • Relevant hybrid mismatch rule in the context of Alternative Investments
  • Scope of the hybrid mismatch rules
    • Related party test
    • Carve-out for minority investors in a fund context
  • Limits of the hybrid mismatch rules
  • Neutralisation of mismatch outcomes
  • Burden of proof
  • Case studies                                                                                                                    

     3. Reverse hybrid mismatch rule

  • Scope of the reverse hybrid mismatch rule
    • Related party test
    • Carve-out for minority investors in a fund context
    • Exclusion of investors on grounds of their tax status
  • Tax treatment of reverse hybrid entities
  • Burden of proof
  • Case studies

     4. Conclusion


More information and registration here.

ATOZ Speaker