Section 14.
(1) A tax mismatch within the meaning of paragraph 2 in the context of a hybrid arrangement within the meaning of paragraphs 3 to 5 shall be neutralized in accordance with paragraphs 6 to 10.
(2) A tax mismatch exists if
1. expenses are deductible in one country and the corresponding income is not subject to tax in any other country (deduction without corresponding income) or
2. the same expenses are deductible in more than one country (double deduction).
(3) A hybrid arrangement exists under the following conditions:
1. a) A tax mismatch within the meaning of paragraph 2(1) arises due to differences in
– the classification of a financial instrument (hybrid financial instrument),
– the attribution of income from a transferred financial instrument (hybrid transfer),
– assessment of the tax subjectivity of the payer or payee (hybrid entity),
– allocation of expenses and income to a permanent establishment (hybrid permanent establishment),
– assessment of the existence of a permanent establishment (unrecognized permanent establishment).
b) A tax mismatch within the meaning of paragraph 2(2) leads to a double deduction of expenses of a hybrid entity, a permanent establishment, or a dual resident entity due to special tax rules.
2. The tax mismatch within the meaning of paragraph 1 arises
– between associated enterprises within the meaning of paragraph 4,
– between the head office and a permanent establishment of an enterprise 