EU Reaches Agreement On Resolving Tax Treaty Disputes
The European Council has reached a compromise on a new draft directive aimed at resolving double taxation disputes within the European Union.
The draft directive requires dispute resolution mechanisms to be mandatory and binding, with clear time limits and an obligation to reach results.
The Council reached a compromise on the following issues:
Scope of the directive – that is, the types of disputes that should be covered. The Council agreed on a broad scope but with the possibility, on a case-by-case basis, of excluding disputes that do not involve double taxation;
Criteria to ensure the independence of those appointed to a pool of independent arbitrators. It was agreed that arbitrators must not be employees of tax advice companies or have given tax advice on a professional basis;
The possibility of setting up a permanent structure to deal with dispute resolution cases if member states so agree.
The Council will adopt the directive once the European Parliament gives its opinion. Member states will have until June 30, 2019, to transpose the directive into national laws and regulations. It will apply to complaints submitted after that date on questions relating to the tax year starting on or after January 1, 2018. The member states may however agree to apply the directive to complaints related to earlier tax years.