The European Commission (EC) launched a public consultation on 16 February 2016 to help identify ways to facilitate dispute resolution for businesses experiencing problems with double taxation in the EU. The consultation is part of the implementation of the EC’s Action Plan for Fair and Efficient Corporate Taxation, launched in June 2015. In the Action Plan, the EC acknowledged that double taxation - by leading to economic distortions and inefficiencies - can be a serious obstacle for businesses operating in more than one Member State, and can thus create a negative impact on cross-border investment. While reiterating that the implementation of a Common Consolidated Corporate Tax Base (CCCTB) would eliminate the risk of double taxation in the EU, the EC also acknowledged that other solutions are needed until this is agreed.
The current mechanisms (Mutual Agreement Procedure and Arbitration) provided by bilateral tax treaties entered into by Member States and, specifically, by the EU multilateral Arbitration Convention, offer relief for double taxation when it occurs, but still result in lengthy procedures if agreement is not reached. The general objective of the initiative is to create a more attractive investment and business environment and to achieve greater legal certainty at a time when recent significant changes to increase tax transparency and combat tax fraud and tax evasion may contribute to an exponential increase in disputes.
The consultation focuses on improving the double taxation dispute resolution mechanisms. It is particularly aimed at gathering stakeholders' views on:
A wide range of views is sought from businesses, civil society and other stakeholders, so we would encourage any taxpayers affected by double taxation disputes to respond. If you would like to respond to this consultation, full details can be found on the EC website. The consultation will close on 10 May 2016.
Further information on this consultation can be found in a Euro Tax Flash by KPMG’s EU Tax Centre.