Economists have formulated the postulate of decision-making neutrality in business taxation: In order not to forestall the most efficient business design, taxation should not interfere with business decisions. The equal treatment of debt and equity is hence a popular demand by economists. The tax burden should not depend on the capital structure of a company.

However, in a flagrant contrast to this petition, nearly all tax systems differentiate between debt and equity. This finding gives reason to deepen the academic analysis. In doing so, one has to examine the different constellations in which the differentiation between debt and equity becomes relevant for tax purposes. Furthermore, hybrid financial instruments have to be included in the analysis in order to explore the boundaries between debt and equity. In this regard it is an important question how the concepts of debt and equity in corporate law, accounting and tax law relate to each other: To what extent do these concepts overlap, and how far do they differ? Inasmuch as the different treatment of debt and equity is relevant for the taxation of multinational corporations, the research project is also related to the problems of international profit shifting and the distribution of taxation rights between different countries.