The Tax Treatment of the Interest Paid on Cocos

George von Furstenberg

Chapter 15 in Contingent Convertibles [CoCos]:A Potent Instrument for Financial Reform, 2014, pp 159-169 from World Scientific Publishing Co. Pte. Ltd.

Abstract: For their treatment under the corporation and business income tax, it matters in several ways whether hybrids, such as cocos, are classified as predominantly debt-like or equity-like. Dividends and capital gains are taxed at preferential rates in some countries, and some countries do not tax capital gains at all. In the United States, for instance, the federal tax rate on qualified dividends and realized long-term capital gains that are paid to fully taxable recipients is capped at 20%. This rate is only about half as large as the maximum individual income tax rate of 39.6% for 2013…

Keywords: Contingent Convertibles; CoCos; Financial Reform; Financial Crisis; Risk Management; Bank Capital; Financial Services; Fixed-Income Securities; Basel III (search for similar items in EconPapers)
Date: 2014
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