Abstract
This article first analyzes the U.S. treatment of off-market interest rate swaps as established by the swap regulations. It critically examines the recharacterization process and explains how recharacterization, while addressing a real problem in some cases, also lays the foundation for the imposition of unexpected, and unwanted, double taxation of cross-border swaps with a U.S. counterparty. The remainder of the article is a broader examination of how and why double taxation of the income resulting from these swaps may arise when one of the contracting parties is a resident of the United States or of another country that were to tax income from such swaps in a manner similar to that of the swap regulations. The final section presents some potential solutions to the double taxation problems discussed in the article.
Recommended Citation
Bruce A. Elvin,
The Recharacterization of Cross-Border Interest Rate Swaps: Tax Consequences and Beyond,
2 Fla. Tax Rev.
(1995).
Available at: https://scholarship.law.ufl.edu/ftr/vol2/iss1/14