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| ''Tax''. | | ''Repurchase agreements'' |
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| Companies often operate in a number of different countries and, as a result, may be resident in more than one country under the different domestic tax laws of each country.
| | A securities repurchase agreement ('repo') involves a pair of trades with the same counterparty in the same security. |
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| Many developed countries have entered into bilateral international tax agreements, known as double tax treaties, with other countries.
| | The second trade reverses the initial sale and purchase, but at a later date and different price. |
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| Many, but not all, of the tax treaties follow the OECD model tax convention.
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| | The off leg is the second trade in the repo. |
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| The OECD model convention provides a basis that can be used to draw up a bilateral tax agreement between two states, that seeks to eliminate double taxation.
| | It is also known as the closing, far, second, or reverse leg. |
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| Double tax treaties also help to encourage cross border trade.
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| | == See also == |
| | * [[Opening leg]] |
| | * [[Repo rate]] |
| | * [[Repurchase agreement]] |
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| The OECD model tax convention contains a 'tie breaker' clause that determines a company’s tax residence for the purposes of the treaty.
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| This is taken to be the place where ‘effective management’ and control (POEM) is carried on.
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| In a tie context this test requires a review of where the day to day management of the company takes place.
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| == See also ==
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| * [[Convention]]
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| * [[Double tax treaties]]
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| * [[Double taxation]]
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| * [[Model]]
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| * [[Organisation for Economic Co-operation and Development]]
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| * [[Permanent establishment]]
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| * [[POEM]]
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| * [[Profit shifting]]
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| * [[Residence]]
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| [[Category:Accounting,_tax_and_regulation]] | | [http://www.treasurers.org/repos ACT briefing note: Practical steps to investing in Repos ] |
| [[Category:The_business_context]]
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| [[Category:Compliance_and_audit]]
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| [[Category:Ethics]]
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| [[Category:Identify_and_assess_risks]]
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| [[Category:Manage_risks]]
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| [[Category:Risk_frameworks]]
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| [[Category:Risk_reporting]]
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Repurchase agreements
A securities repurchase agreement ('repo') involves a pair of trades with the same counterparty in the same security.
The second trade reverses the initial sale and purchase, but at a later date and different price.
The off leg is the second trade in the repo.
It is also known as the closing, far, second, or reverse leg.
See also
ACT briefing note: Practical steps to investing in Repos
