Double Tax disputes: Draft EU Directive
The Council of the European Union has proposed a draft EU Directive, to be in effect by June 30 2019, that would resolve double taxation disputes between Member States. A summary of the Draft Directive is provided, as well as referenced herein.
This proposal is based upon the foundation of the Union Arbitration Convention (90/436/EEC) re: cross-border tax disputes.
- 3 years, from first notification, to file a complaint by the taxpayer
- Each competent authority (CA) acknowledges receipt within 2 months
- Additional 3 months by CA’s to request additional information, by which the taxpayer has 3 months to provide
- Approx. 6 months later, CA’s decide to accept or reject the complaint; or a CA can decide to resolve unilaterally by which the Directive is terminated
- Taxpayer may appeal per national rules a rejection of the complaint
- CA’s try to resolve issue within 2 years, which may be extended by 1 year
- Upon taxpayer’s request, an Advisory Commission shall be established where the complaint is rejected by not all of the relevant CA’s, or a failure by CA’s to reach agreement. This request can be denied by a Member State on a case by case basis where a question of dispute does not involve double taxation.
- Advisory Commission = Chair, 1-2 representatives of each CA, and 1-2 independent persons by each CA
- Advisory Commission to adopt a decisions within 6 months
- CA’s may, alternatively, set up an Alternative Dispute Resolution Commission instead of the Advisory Commission; this commission has freedom of techniques to settle
- Professional secrecy standards are prescribed
- Advisory or Alternative Commission opines in 3-6 months
- CA’s shall agree within 6 months of the opinion on how to resolve the complaint; they can decide on a decision that deviates from the opinion or be bound by the opinion
- Final decision does not constitute a precedent
- (Redacted) decision is published and maintained in an online central repository
- Evaluation of process by June 30, 2024 and issue a report
As the key point summary infers, there are many provisions in the Draft Directive, requiring a proactive effort by the taxpayer and relevant CA’s. The Directive can be reviewed via the attached link: