Eu urope Vienna Convention on the law of Accession of new eu member states The jtF also assessed whether Treaties The JTPF examined ways to prevent a tive procedures might be available prolonged ratification process with respect dite the entry of the new member states. Article 24- Entry into force to the member states that joined the eu However, even the "entry in force upon sig- A treaty enters into force in such manner and on May 1 2004. The European nature"or the"provisional application"pro- upon such date as it may provide or as the Commission itself specifically noted that vided in articles 24 and 25 of the UN negotiating states may agree the jTPF had to spend considerable meet- Vienna Convention on the Law of Treaties ing time addressing issues related to the (see box would -at least -require ratifi- failure of all of the member states to rati- cation by the majority of the old and new Article 25-Provisional application fy the extending Protocol as well as the member states. Based on experience thus e A treaty or a part of a treaty is applied provi- Accession Convention for Austria, Finland far, it is unlikely that such procedures ally pending its entry into force if: and Sweden. The benefit of the would advance ratification (a)the treaty itself so provides; or Arbitration Convention -that is, the abo- (b)the negotiating states have in some other lition of double taxation -would be seri- Future work programme of the JTPF manner so agreed ously jeopardized by another protracted It remains to be seen whether the o Unless the treaty otherwise provides or the procedure Council will follow the recommendations negotiating states have otherwise agreed, the Furthermore, the Commission expressed of the Commission. Nevertheless, the provisional application of a treaty or a part of a concern that the lack of a tax treaty network JTPF, whose mandate officially expires at treaty with respect to a state shall be terminated between the new member states and the old the end of 2004, is examining its work f that state notifies the other states between member states could exacerbate the situa- programme, including transfer pricing which the treaty is being applied provisionally of tion. As taxpayers will not have access to a documentation requirements and poten ts intention not to become a party to the treaty. MAP or the Arbitration Convention, taxpay- tial approaches to standardizing these Text: United Nations, Treaty Series, vol. 1/55. p 331. ers may face a risk of unresolved double tax- rules in the EU. The JTPF also will ana- the above measures in the context of maps The draft code recommends that member under tax treaties The draft Code further sets out useful states introduce measures so that taxpayers phase, including the list of potential arbi- can obtain a suspension of tax collection it is to function and the form of the during a MAP and or arbitration procedure panels opinion Finally, the draft Code of Conduc cludes a recommendation on the suspen- ation. Following the JTPF's recommenda- lyze whether advance pricing agreements sion of tax collection during the proceed- tion, the Commission has urged the member could be a helpful tool to improve coop- ings.The JTPF analyzed existing rules in states to commit themselves to ratifying an eration between the tax authorities of the the member states and concluded that in accession convention for the new member member states and to reduce administra almost all member states, suspension of tax states as soon as possible at the latest with- tive burdens and compliance costs for is subject to national law although the rules in two years. The Commission would prefer taxpayers differ significantly. These rules generally a provision in this Accession Convention that Deloitte Touche Tohmatsu, Duesseldorf. relate to domestic procedures and do not would allow for an intermediate application Heinz-Klaus Kroppen(kroppen@ deloitte. de) encompass MAP or arbitration procedures. of the Arbitration Convention between the is one of the business experts of the Forum The draft code recommends that member member states that have ratified it. For and Stephan Rasch(srasch@deloitte. de)is states introduce measures so that taxpayers future enlargements, the introduction of an his scientific assistant for the EU JTPF work can obtain a suspension of tax collection automatic or unilateral accession process Both are with the European transfer pricing during a MAP and/or arbitration procedure. should be considered. group of deloitte, headed by kroppen TRMa,6552下95673 367535242065664393002 043773053921711325:175752348748 5485037577034778960916371872 40495063105079229689458923542019956 05awww.internationaltaxreview.com 931595024455 36g63ue22k0z5 48Jne2004Europe the above measures in the context of MAPs under tax treaties. The draft Code further sets out useful and detailed guidance on the arbitration phase, including the list of potential arbi￾trators, how the panel is established, how it is to function and the form of the panel’s opinion. Finally, the draft Code of Conduct includes a recommendation on the suspen￾sion of tax collection during the proceed￾ings. The JTPF analyzed existing rules in the member states and concluded that in almost all member states, suspension of tax is subject to national law although the rules differ significantly. These rules generally relate to domestic procedures and do not encompass MAP or arbitration procedures. The draft code recommends that member states introduce measures so that taxpayers can obtain a suspension of tax collection during a MAP and/or arbitration procedure. Accession of new EU member states The JTPF examined ways to prevent a prolonged ratification process with respect to the member states that joined the EU on May 1 2004. The European Commission itself specifically noted that the JTPF had to spend considerable meet￾ing time addressing issues related to the failure of all of the member states to rati￾fy the extending Protocol as well as the Accession Convention for Austria, Finland and Sweden. The benefit of the Arbitration Convention – that is, the abo￾lition of double taxation – would be seri￾ously jeopardized by another protracted ratification procedure. Furthermore, the Commission expressed concern that the lack of a tax treaty network between the new member states and the old member states could exacerbate the situa￾tion. As taxpayers will not have access to a MAP or the Arbitration Convention, taxpay￾ers may face a risk of unresolved double tax￾ation. Following the JTPF’s recommenda￾tion, the Commission has urged the member states to commit themselves to ratifying an accession convention for the new member states as soon as possible, at the latest with￾in two years. The Commission would prefer a provision in this Accession Convention that would allow for an intermediate application of the Arbitration Convention between the member states that have ratified it. For future enlargements, the introduction of an automatic or unilateral accession process should be considered. The JTPF also assessed whether alterna￾tive procedures might be available to expe￾dite the entry of the new member states. However, even the “entry in force upon sig￾nature” or the “provisional application” pro￾vided in articles 24 and 25 of the UN Vienna Convention on the Law of Treaties (see box) would – at least – require ratifi￾cation by the majority of the old and new member states. Based on experience thus far, it is unlikely that such procedures would advance ratification. Future work programme of the JTPF It remains to be seen whether the Council will follow the recommendations of the Commission. Nevertheless, the JTPF, whose mandate officially expires at the end of 2004, is examining its work programme, including transfer pricing documentation requirements and poten￾tial approaches to standardizing these rules in the EU. The JTPF also will ana￾lyze whether advance pricing agreements could be a helpful tool to improve coop￾eration between the tax authorities of the member states and to reduce administra￾tive burdens and compliance costs for taxpayers. Deloitte Touche Tohmatsu, Duesseldorf. Heinz-Klaus Kroppen (hkroppen@deloitte.de) is one of the business experts of the Forum and Stephan Rasch (srasch@deloitte.de) is his scientific assistant for the EU JTPF work. Both are with the European transfer pricing group of Deloitte, headed by Kroppen. 48 June 2004 www.internationaltaxreview.com Article 24 - Entry into force ● A treaty enters into force in such manner and upon such date as it may provide or as the negotiating states may agree. ● … Article 25 - Provisional application ● A treaty or a part of a treaty is applied provi￾sionally pending its entry into force if: (a) the treaty itself so provides; or (b) the negotiating states have in some other manner so agreed. ● Unless the treaty otherwise provides or the negotiating states have otherwise agreed, the provisional application of a treaty or a part of a treaty with respect to a state shall be terminated if that state notifies the other states between which the treaty is being applied provisionally of its intention not to become a party to the treaty. Text: United Nations, Treaty Series, vol. 1155, p.331. Vienna Convention on the Law of Treaties The draft code recommends that member states introduce measures so that taxpayers can obtain a suspension of tax collection during a MAP and/or arbitration procedure