EU: New rules for resolving tax treaty-related disputes | KPMG | GLOBAL

EU: New rules, process for resolving tax treaty-related disputes

EU: New rules for resolving tax treaty-related disputes

The European Commission today announced that the EU Member States have given a “green light” for new rules to “better resolve tax disputes.” The decision taken by EU finance ministers at the ECOFIN Council meeting in Luxembourg is intended to allow businesses and individuals to resolve disputes related to the interpretation of tax treaties more swiftly and effectively. The new rules will also cover issues related to double taxation.

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As explained in an EC release, the improvements to the rules for resolving tax disputes will provide greater certainty for taxpayers that are seeking resolution of their interpretation of tax treaties or double taxation problems. In particular, a broader range of cases will be covered, and EU Member States will now have clear deadlines to agree on a binding solution, for more timely decisions. EU Member States will now have a legal duty to take conclusive and enforceable decisions under the improved dispute resolution mechanism. 

New process

Under the new rules, taxpayers faced with tax treaty disputes can initiate a procedure whereby the EU Member States in question must try to resolve the dispute amicably within two years. If at the end of this period, no solution has been found, the EU Member States must set up an advisory commission to arbitrate. If the EU Member States fail to do this, the taxpayer can bring an action before the national court to do so. This advisory commission will be composed of three independent members and representatives of the competent authorities in question. It will have six months to deliver a final, binding decision. This decision will be immediately enforceable and must resolve the dispute.

 

Read an October 2017 report prepared by the KPMG member firm in the UK

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