Instances excluded

The Anti-Tax Avoidance Directive (ATAD II) provides for certain instances that are excluded from the scope of these rules.

These shall be excluded from the scope of application:

hybrid mismatches resulting from a payment of interest under a financial instrument to an associated enterprise where:

(i) the  financial instrument has conversion, bail-in or write down features;

(ii) the financial instrument has been issued  with  the  sole  purpose of satisfying loss-absorbing  capacity  requirements applicable  to  the  banking  sector  and  the financial instrument is recognised as such in the  taxpayer's  loss-absorbing  capacity requirements;

(iii) the financial instrument has been issued:

(A) in connection with financial instruments with conversion, bail-in or write down features at the level of a parent undertaking;

(B) at a level necessary to satisfy applicable loss-absorbing capacity requirements;

(C) not as part of a structured arrangement; and

(iv) the overall net deduction for the consolidated  group  under  the  arrangement does not exceed the amount that it would have  been  had  the  taxpayer  issued  such financial instrument directly to the market:

Provided that the provisions of paragraph (b) shall only apply until 31 December 2022.