EU Council Agrees Its Position On Dispute Resolution Procedures

The EU Council agreed on a new system for resolving double taxation disputes within the EU. The Council reached compromise on the scope of the directive, 'independent persons of standing' and standing committee. During the same meeting, the Council also discussed a proposal for a common corporate tax base (CCTB) in the EU.

Dispute Resolution

The proposal aims to improve the mechanisms used when disputes arise from the interpretation of agreements on the elimination of double taxation. It requires dispute resolution mechanisms to be mandatory and binding, with clear time limits and an obligation to reach results.

The Council endorsed a compromise reached on the following issues:

  • Scope of the directive, i.e. 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;
  • 'Independent persons of standing': 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. Unless agreed otherwise, the panel chair must be a judge;
  • Standing committee: the possibility of setting up a permanent structure to deal with dispute resolution cases if member states so agree.

Member states will have time 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 Council informed.

Proposal

The presidency confirmed its intention to continue discussions on new elements of the proposal, and that an appropriate degree of flexibility should be provided for. A separate proposal on tax consolidation (CCCTB) will be considered without delay once the CCTB rulebook has been agreed. The Council will require unanimity to adopt the directive, after consulting the European Parliament.

Sources: EU Council - Meeting, EU Council - Double Taxation
 

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