Implications of the international use of interest rate derivatives on taxation

Derivatives are financial instruments whose value is contingent upon the market value of one or more underlying instruments. The taxation problems associated with derivative financial products remain incompletely explained. An article sets forth the national taxation in several countries of the Orga...

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Bibliographic Details
Published in:International tax journal 1998-07, Vol.24 (3), p.12
Main Authors: Oestreicher, Andreas, Haun, Jurgen
Format: Article
Language:English
Subjects:
Agreements
Comparative analysis
Derivatives
Double taxation
Financial instruments
Fiscal years
Futures
Hedging
Interest rates
International
Market value
Permanent establishment
Taxable income
Taxation
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Summary:Derivatives are financial instruments whose value is contingent upon the market value of one or more underlying instruments. The taxation problems associated with derivative financial products remain incompletely explained. An article sets forth the national taxation in several countries of the Organization for Economic Cooperation and Development (OCED) and discusses the avoidance of double taxation and the prevention of fiscal evasion that can result from the international use of derivatives. The discussion illustrates the tax consequences of the international use of interest derivatives in a functional area. The national taxation of derivatives in various countries of the OCED are examined for this purpose. The provisions on this subject in the Federal Republic of Germany and the US are dealt with in detail in order to illustrate the spectrum of consequences of taxation. In each case, the type of income, and the timing of income or deductions are examined.
ISSN:0097-7314