Europe Table 1: Requests for arbitration after January I 2000- MAP eriod is the date of the " first notification of the action resulting in taxation not in Member state position Member state Comments ccordance with the provisions of the Continue the procedure as fore- Germany the other member state does the way most favourable to the taxpayer. seen in the Convention if the not agree, with the taxpayers This red nt should be met by ref other member state agrees. consent, those member states ring to the first tax assessment. will initiate a MAP procedure It has been claimed that member states Netherlands under the relevant tax treaty. interpretations of the starting point of the two-year period differ significantly Taxpayers also have asserted that the posi tion of certain member states interferes Most member states consider the Austria Belgium, Finland, France, ith the Convention, because such mem- Convention, or rather the two.Belgium Portugal, Sweden initiate MAP ber states have adopted the view that the ar period for the MAP, to be Denmark automatically. Austria, Denmark two-year period does not start until the suspended. These states will initi. Finland and Italy only upon the request of other member state has issued a formal ate a MAP but under the tax France the taxpayer. notification that it does not accept an treaty with the other member adjustment. The draft Code of Conduct state proposes that the two-year period start on the later of the date of the tax assessment notice(that is, a final decision of the tax administration) and the date on which the Table 2: Requests for arbitration after January I 2000-arbitration procedure competent authority receives the request and specific minimum information. The Member state positio Member state Comments minimum information would include among other things, identification of the Continue the arbitration proce- Germany If the other member state does taxpayer, details of the relevant facts and dure as foreseen in the ot agree,continue the MAP pro. circumstances of the case and an explana Arbitration Convention if the Ireland cedure under the relevant tax tion as to why the taxpayer believes that other member states agrees treaty(Spain only if so requested). tax is being levied other than in accordance Netherlands with the Convention The draft Code of Conduct also address- es administrative issues that should ensure the practical functioning of the Convention Arbitration phase of the Austria Arbitration procedure may be and improve transparency. Although these used only when the Convention items may appear a matter of course,it re-enters into force. Italy will use should be noted that the member states do the arbitration procedure onl not have much experience, particularly upon a new request. with respect to the arbitration phase of the Italy Convention. The Code proposes a common Portugal working language to conduct the exchange Sweden of position papers and the proceedings, spe- cific time-frames to carry out obligations under the Convention and that the taxpay Several member states have adopted a three years of the first notification of action er be kept fully apprised of significant progressive approach and are prepared to that results in, or is likely to result in, dou- developments during the proceedings apply the Arbitration Convention, includ- ble taxation. The competent authorities To ensure that cases are processed expe- g the arbitration phase, when the other then have two years in which to reach an ditiously, the Code of Conduct recom- member state involved has ratified the agreement that eliminates double taxation. mends that the competent authority Prolongation Protocol. Therefore, for The JTPF has reached consensus that acknowledge the delivery of the taxpayer's example, it should be possible for a the starting point of the three- year period request within one month and request any German taxpayer to submit an application should be the date of the first tax assess- additional information it deems to be nec- for an arbitration procedure with the UK ment notice or an equivalent that is, or is essary for further clarification within two even though the Arbitration Convention is likely to, lead to double taxation. The draft months of the taxpayer's initial application not in force(see Tables 1 and 2) Code of Conduct also recommends that With respect to the exchange of position member states apply this definition to the papers, the competent authority of the Code of conduct three-year period included in article 25 of member state of the applicant taxpayer One of the impediments identified in the the OECd model treaty and implemented should see that the paper is sent out within Commissions 2001 Company Taxation in tax treaties concluded by the member four months following the date of the tax Study relates to various time periods pro- states. The JTPF essentially based its con- assessment notice or the date on which the vided in the Arbitration Convention. To clusions on the Commentary on the oecd competent authority received the request. qualify for arbitration, a taxpayer must model treaty, which explicitly provides that To ensure a consistent approach, the draft request competent authority relief within the starting point of the three-year time Code recommends that the parties apply Jne200447Europe Several member states have adopted a progressive approach and are prepared to apply the Arbitration Convention, includ￾ing the arbitration phase, when the other member state involved has ratified the Prolongation Protocol. Therefore, for example, it should be possible for a German taxpayer to submit an application for an arbitration procedure with the UK even though the Arbitration Convention is not in force (see Tables 1 and 2). Code of Conduct One of the impediments identified in the Commission’s 2001 Company Taxation Study relates to various time periods pro￾vided in the Arbitration Convention. To qualify for arbitration, a taxpayer must request competent authority relief within three years of the first notification of action that results in, or is likely to result in, dou￾ble taxation. The competent authorities then have two years in which to reach an agreement that eliminates double taxation. The JTPF has reached consensus that the starting point of the three-year period should be the date of the first tax assess￾ment notice or an equivalent that is, or is likely to, lead to double taxation. The draft Code of Conduct also recommends that member states apply this definition to the three-year period included in article 25 of the OECD model treaty and implemented in tax treaties concluded by the member states. The JTPF essentially based its con￾clusions on the Commentary on the OECD model treaty, which explicitly provides that the starting point of the three-year time period is the date of the “first notification of the action resulting in taxation not in accordance with the provisions of the Convention” and should be interpreted in the way most favourable to the taxpayer. This requirement should be met by refer￾ring to the first tax assessment. It has been claimed that member states’ interpretations of the starting point of the two-year period differ significantly. Taxpayers also have asserted that the posi￾tion of certain member states interferes with the Convention, because such mem￾ber states have adopted the view that the two-year period does not start until the other member state has issued a formal notification that it does not accept an adjustment. The draft Code of Conduct proposes that the two-year period start on the later of the date of the tax assessment notice (that is, a final decision of the tax administration) and the date on which the competent authority receives the request and specific minimum information. The minimum information would include, among other things, identification of the taxpayer, details of the relevant facts and circumstances of the case and an explana￾tion as to why the taxpayer believes that tax is being levied other than in accordance with the Convention. The draft Code of Conduct also address￾es administrative issues that should ensure the practical functioning of the Convention and improve transparency. Although these items may appear a matter of course, it should be noted that the member states do not have much experience, particularly with respect to the arbitration phase of the Convention. The Code proposes a common working language to conduct the exchange of position papers and the proceedings, spe￾cific time-frames to carry out obligations under the Convention and that the taxpay￾er be kept fully apprised of significant developments during the proceedings. To ensure that cases are processed expe￾ditiously, the Code of Conduct recom￾mends that the competent authority acknowledge the delivery of the taxpayer’s request within one month and request any additional information it deems to be nec￾essary for further clarification within two months of the taxpayer’s initial application. With respect to the exchange of position papers, the competent authority of the member state of the applicant taxpayer should see that the paper is sent out within four months following the date of the tax assessment notice or the date on which the competent authority received the request. To ensure a consistent approach, the draft Code recommends that the parties apply www.internationaltaxreview.com June 2004 47 Table 1: Requests for arbitration after January 1 2000 – MAP Member state position Continue the procedure as fore￾seen in the Convention if the other member state agrees. Most member states consider the Convention, or rather the two￾year period for the MAP, to be suspended. These states will initi￾ate a MAP but under the tax treaty with the other member state. Member state Germany Greece Ireland Luxembourg Netherlands Spain UK Austria Belgium Denmark Finland France Italy Portugal Sweden Comments If the other member state does not agree, with the taxpayer‘s consent, those member states will initiate a MAP procedure under the relevant tax treaty. Belgium, Finland, France, Portugal, Sweden initiate MAP automatically. Austria, Denmark and Italy only upon the request of the taxpayer. Table 2: Requests for arbitration after January 1 2000 – arbitration procedure Member state position Continue the arbitration proce￾dure as foreseen in the Arbitration Convention if the other member states agrees. Arbitration phase of the Convention is suspended. Member state Germany Greece Ireland Luxembourg Netherlands Spain UK Austria Belgium Denmark Finland France Italy Portugal Sweden Comments If the other member state does not agree, continue the MAP pro￾cedure under the relevant tax treaty (Spain only if so requested). Arbitration procedure may be used only when the Convention re-enters into force. Italy will use the arbitration procedure only upon a new request