835AL Payment to hybrid entity deduction without inclusion mismatch outcome

Summary

This section sets out what is meant by a payment to hybrid entity deduction without inclusion mismatch outcome and provides the rule to neutralise such an outcome.

Details

(1) Payment to hybrid entity deduction without inclusion mismatch outcome

Subject to subsection (1A), a payment to hybrid entity deduction without inclusion mismatch outcome shall arise in respect of a payment where it would be reasonable to consider that –

• there is a deduction in the payer territory without a corresponding amount being included in the payee territory, and
• he reason why the income is not included in the payee territory is because of differences in the way payments to a hybrid entity are allocated between—

1. 1. the territory in which the hybrid entity is established, and
   2. the territory in which the participator concerned is established.

A payment to a hybrid entity deduction without inclusion mismatch outcome shall not arise under subsection (1) where the participator concerned is an entity that is exempt from tax in the territory in which it is established.

(2) The primary rule

Where the State is the payer territory the payer shall be denied a deduction for so much of the payment which gives rise to a deduction without inclusion mismatch outcome.

Relevant Date: Finance Act 2021