ATAD — Article 9

a transaction or series of transactions between associated enterprises or entered into as part of a structured arrangement except to the extent that one of the jurisdictions involved in the transaction or series of transactions has made an equivalent adjustment in respect of such hybrid mismatch. in the transaction or series of transactions has made an equivalent adjustment in respect of such hybrid mismatch. 4. A Member State may exclude from the scope of: (a) point (b) of paragraph 2 of this Article hybrid mismatches as defined in points (b), (c), (d) or (f) of the first subparagraph of Article 2(9); (b) points (a) and (b) of paragraph 2 of this Article 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 — in connection with financial instruments with conversion, bail-in or write down features at the level of a parent undertaking, — at a level necessary to satisfy applicable loss absorbing capacity requirements, — 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. Point (b) shall apply until 31 December 2022. had the taxpayer issued such financial instrument directly to the market. Point (b) shall apply until 31 December 2022. 5. To the extent that a hybrid mismatch involves disregarded permanent establishment income which is not subject to tax in the Member State in which the taxpayer is resident for tax purposes, that Member State shall require the taxpayer to include the income that would otherwise be attributed to the disregarded permanent establishment. This applies unless the Member State is required to exempt the income under a double taxation treaty entered into by the Member State with a third country. is required to exempt the income under a double taxation treaty entered into by the Member State with a third country. 6. To the extent that a hybrid transfer is designed to produce a relief for tax withheld at source on a payment derived from a transferred financial instrument to more than one of the parties involved, the Member State of the taxpayer shall limit the benefit of such relief in proportion to the net taxable income regarding such payment.