On December 10th, 2019, the German Federal Ministry of Finance published a draft bill for a law to implement the requirements of the so-called Anti-Tax Avoidance Directive (ATAD). Essential components are the provisions combating the effects of hybrid mismatch arrangements (anti-hybrid rules), which are specified by ATAD II. Although several regulations in Germany already eliminate the effects resulting from hybrid mismatches, especially in outbound cases, there are in fact no corresponding rules that deny the tax deduction of expenses in inbound cases. For that reason, the new sec 4k German Income Tax Act needs to be introduced. Christian Kahlenberg and Rebekka Rein summarize the new provision and give some practical advice on a case-by-case basis.
