The European Commission (EC) is running a two-month consultation into how the current double taxation dispute resolution mechanisms operate and options for improvement
The consultation forms part of the work on implementing the June 2015 action plan for a fair and efficient corporate tax system in the EU.
The current mechanisms (mutual agreement procedure, arbitration) are provided by the bilateral tax treaties entered into by member states and, specifically, by the EU multilateral Arbitration Convention (Convention 90/436/EEC on the elimination of double taxation in connection with the adjustment of profits of associated enterprises).
The scope of the Arbitration Convention is limited to transfer pricing and allocation of profits to permanent establishment.
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 where recent significant changes to increase tax transparency and fight against tax fraud and tax evasion may contribute to an exponential increase of disputes.
This consultation focuses on:
- the relevance of removing double taxation for enterprises operating cross border;
- the impact and effectiveness of the double taxation dispute resolution mechanisms for business and enterprises established in the EU;
- how these mechanisms can be improved; and
- possible solutions.
The consultation closes for feedback on 10 May 2016. the full document is available here.