On 14 July 2023, the German Ministry of Finance has released a draft decree outlining the application of the country’s anti-hybrid rules, established in 2021 under the European Union (EU) Anti-Tax Avoidance Directive (ATAD) implementation Law. These rules, effective from 1 January 2020, aim to prevent the deduction of expenses in Germany when the resulting income is either untaxed or subject to low taxation due to hybrid mismatches or double deductions.
However, the draft decree lacks comprehensive guidance on various complex issues. While it offers examples of basic scenarios, it falls short in addressing practical questions, such as certain disregarded US-outbound structures, that hold significant importance in real-world applications. The draft decree concerning the implementation of anti-hybrid regulations has been published by the German Federal Ministry of Finance.
