EU member states want a newly proposed dispute resolution mechanism to be limited to cases arising from diverging interpretations of agreements and conventions in effect among them, according to a draft compromise seen by Tax Analysts.
A proposed directive put forward by the European Commission in October 2016 provides for the elimination of double taxation by agreement between the member states including, if necessary, the opinion of an independent advisory body. The directive focuses on businesses and companies, the main stakeholders affected by double taxation situations. (Prior coverage .)
The scope of the commission's draft plans is quite broad, since it covers all cross-border situations subject to double income taxes imposed on business profits.
"Member states have expressed a marked preference for this directive to be applicable where treaties are in effect between them," the Maltese presidency of the Council of the European Union said.
"Such disputes shall be limited to cases where the actions of one or more member states result, or are likely to result, in double taxation on income or gains that is not in accordance with the provisions" of those treaties, the new draft plan states.
"It's a major change to the commission's proposal," one council source told Tax Analysts.
The Maltese presidency has also considered some member states' proposal for a de minimis rule to exclude disputes in which the amounts involved are immaterial. "This proposal presents certain challenges," the Maltese presidency writes. "What is material may be different from one member state to another, as well as from one taxpayer to another." The presidency said it has decided not to include such a rule.
The draft makes clear that a taxpayer subject to double taxation would have to submit the complaint to each competent authority at the same time, with the same information. The text introduces a time frame of two months for authorities to inform each other about the complaint.
Member states have included the possibility for an authority to decide, within a period of six months, to resolve a dispute on a unilateral basis without involving the other competent authority. The draft also provides for the immediate termination of cases when a taxpayer withdraws its complaint.
The commission's proposal foresaw a period of two years for member states to resolve disputes
Cette information est extraite de notre service d'actualité taxnotes