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SCHEDULE 7E+W+S+N.I.Hybrid and other mismatches

Hybrid payee deduction/non-inclusion mismatchesE+W+S+N.I.

11In section 259GB (hybrid payee deduction/non-inclusion mismatches and their extent), after subsection (4) insert—E+W+S+N.I.

(4A)In applying subsection (4)(b) in a case where the payee is a partnership, it is to be assumed that no amount of ordinary income arises to the payee, by reason of the payment or quasi-payment, if—

(a)a partner in the partnership is entitled to the amount, and

(b)having regard only to—

(i)the law of the territory where the partnership is established, and

(ii)the law of the territory where the partner is resident for tax purposes or, if the partner is not resident anywhere for tax purposes, where the partner is established,

the payee would not be regarded as a hybrid entity.

(4B)In subsection (4A) “partnership” has the meaning given by section 259NE(4).