Purpose Of Mutual Agreement Procedure

Jurisdiction of the BZSt with respect to mutual agreement, arbitration and APAs Procedures Some may argue that the advantage of arbitration is that the existence of this mechanism encourages Member States to settle disputes before the expiry of the two-year period, which would be more a success than a failure of the agreement. However, statistics also show that 202 cases had exceeded the two-year deadline, while it had been cancelled with the taxpayer`s consent. This indicates that taxpayers do not always view the arbitration available to them under the agreement as a desirable means of resolving double taxation. The mutual agreement reached becomes binding only if the subject approves it in writing, waives the right of appeal and withdraws all pending appeals. The objective of the POP is to eliminate either double taxation or taxation that does not comply with the applicable convention. Double taxation can be legal (if the same tax is taxed on the same income in two states) or economic (if the taxation of a taxpayer`s income in one state doubles the taxation of the income of another taxpayer bound to the former in another state. This is particularly common for profit transfers between companies of the same group of equals). A proposal for adjustment in the case of an adversarial adjustment procedure When measures by one or more countries lead to a non-DBA tax (particularly in the area of double taxation), the subject concerned may request a procedure of mutual agreement. In Germany, the Bundeszentralamt for Steuern (BZSt) is responsible for the implementation of these procedures. If all the conditions are met, the countries concerned try to resolve the tax dispute by mutual agreement. This will generally avoid double taxation. Overall, it is clear that the MLI extends taxpayers` access to three years, both in terms of extending the period during which taxpayers must initiate a POB period, provides an effective two-year period for the relevant authorities to resolve a case (after that date, it may be subject to arbitration).

The MLI has led to a greater homogeneity of approach on key issues such as arbitration and, above all, the adoption of a single map article for covered tax treaties. information necessary to apply for mutual agreement under the European Union Arbitration Agreement. The legal basis for a mutual agreement procedure is the DBA concerned. Germany has concluded DBA with more than 90 countries in the world. Most of these DBAs follow the OECD`s draft international agreement. The provisions on mutual agreement procedures are set out in Article 25 of the OECD Model Convention. Recent ABA often contains provisions that prescribe arbitration through an unsuccessful mutual agreement procedure. VAT (VAT) must be paid for the purchase of goods and services in many countries. The VAT refund procedure offers businesses, embassies/consulates and international organisations the …

Upon receipt of the application, the BZSt verifies whether the conditions for the implementation of a mutual agreement procedure are met.