Income Tax Treaties: Competent Authority Functions and Procedures of Selected Countries (L-N) (Portfolio 6892)

Tax Management Portfolio, Income Tax Treaties: Competent Authority Functions and Procedures of Selected Countries (L–N), No. 6892, discusses the competent authority functions and procedures of Luxembourg, Mexico, Netherlands, New Zealand, and Norway. To view this Portfolio, visit Bloomberg Tax for a free trial.

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Description

Tax Management Portfolio, Income Tax Treaties: Competent Authority Functions and Procedures of Selected Countries (L–N), No. 6892, discusses the competent authority functions and procedures of Luxembourg, Mexico, Netherlands, New Zealand, and Norway. Each chapter initially focuses on the mutual agreement procedure that is available to taxpayers subject to double taxation, and in that connection discusses such topics as the basic procedure for requesting competent authority relief, statute of limitations issues, the role of Appeals (if any), the small case procedure (if any), interest on deficiencies and refunds, and the possibility of arbitration. If a country also has procedures for Advance Pricing Agreements, those are also considered.

Each chapter then discusses the procedures relating to consultation between competent authorities regarding the interpretation or application of an income tax treaty, exchange of information, and assistance in collection. With respect to exchange of information, each chapter also considers procedures under any tax information exchange agreements to which the country is a party.

For competent authority functions and procedures of the United States, see 940 T.M., U.S. Income Tax Treaties — U.S. Competent Authority Functions and Procedures.

This Portfolio may be cited as Tilquin, et al., 6892 T.M., Income Tax Treaties: Competent Authority Functions and Procedures of Selected Countries (L–N).

Authors

Stephan Tilquin

Stephan Tilquin is a Partner in the International Tax Department at Deloitte, Luxembourg, specializing in transfer pricing. Mr. Tilquin obtained a Bachelor of Science degree in Economics at the University of Brussels and a Master's Degree in International Tax from the Solvay Business School, both in Brussels, Belgium. Mr. Tilquin is also a chartered accountant with over sixteen years of experience serving corporate investors, mostly US-based MNC's with respect to cross-border restructurings and international corporate tax matters related to Luxembourg transfer pricing considerations.

Dinko Dinev

Dinko Dinev is a Director in the Transfer Pricing Department at Deloitte, Luxembourg. Mr. Dinev obtained a Master of Arts in International Relations at the University of Sofia, Bulgaria and also holds a Master of Laws (LL.M) in International Law from the University of Groningen, the Netherlands. Mr. Dinev has more than eleven years of experience in assisting clients with complex cross-border tax issues focusing on transfer pricing.

Ricardo González Orta, Esq.,

Ricardo González Orta (CPA, Universidad Iberoamericana) is a partner in Deloitte & Touche's Mexico City office. He is the Tax & Legal Leader of the Mexican practice, and the firm's Latin American Business Tax Leader.

Mauricio Martínez D'Meza, Esq.

Mauricio Martínez D'Meza (Attorney, ITAM) is a partner in Deloitte & Touche's Mexico City office. He heads the Tax Controversy practice in Mexico.

Ernst Bunders

Ernst Bunders, tax adviser (of counsel), is a member of the Tax Practice Group of Loyens & Loeff. He specializes in Dutch tax treaties and tax legislation. He focuses on resolving major tax disputes between taxpayers and the tax administration, and Mutual Agreement Procedures. Beginning in 1973, Ernst worked for the Dutch Ministry of Finance, advising the Deputy Minister of Finance on tax policy and legislation. He spent considerable time negotiating Dutch tax treaties and some EU directives, and also represented the Netherlands in OECD meetings in Paris, including those relating to the OECD project on Harmful Tax Competition. He was also a member of the Dutch delegation to the European Code of Conduct Group. Beginning in 1999, Ernst was the head of the office in the Dutch tax administration that is responsible for the levying of tax on large enterprises in the Netherlands. Ernst received his degree in tax law in 1970 from the University of Leiden, and speaks Dutch, English, and German.

Hendrik van Waveren

Hendrik van Waveren, tax adviser of Hamelink & Van den Tooren. He mainly advises international enterprises and investment funds on cross-border investments. Hendrik received his degree in tax economics in 2013 from the University of Amsterdam, and speaks Dutch, English, and German.

Diana Maitland

Diana Maitland is a Partner in the Wellington tax practice of Deloitte and leads the Deloitte National Transfer Pricing Group in New Zealand. Diana has more than 20 years of tax experience. Having chosen to specialise in transfer pricing at the inception of the New Zealand transfer pricing regime in 1996, most of those years have been dedicated solely to transfer pricing. Prior to this, Diana worked in general income tax in New Zealand and spent over two years with the international tax group in the London office. Diana has advised a large number of multinational clients on transfer pricing matters in a variety of industries. In particular, Diana has assisted companies in the banking, insurance, services, importation/distribution, utilities, retail, and manufacturing industries. Diana has successfully negotiated a number of Advance Pricing Agreements (both bilateral and unilateral) and has also assisted many clients in successfully defending their transfer pricing position in the face of Inland Revenue review or audit.

Ragna Flækøy Skjåkødegård

Ragna Flækøy Skjåkødegård (Master of law, University of Oslo) is senior lawyer at Deloitte Advokatfirma AS, specializing in tax law. Ragna joined Deloitte in 2011, and before that she was an associate at the law firm Kluge Advokatfirma AS. Ragna became a lawyer in 2012. Ragna wrote her Master's Thesis on the Norwegian non-statutory general anti-avoidance rule (2009). Ragna is the author of various articles on taxation, and advises companies on tax-related matters, including strategic tax planning and tax controversies. She is also currently an examination sensor at the Faculty of Law at the University of Oslo.

Table of Contents

Detailed Analysis
Chapter 100 — LUXEMBOURG
100:I. Introduction
100:II. Luxembourg Competent Authority
A. Functions in General
B. Identification
100:III. Mutual Agreement Procedure in Taxpayer Cases
A. Treaty Provisions on Mutual Agreement Procedure
1. OECD Model Treaty
2. Luxembourg Income Tax Treaties
B. Background
1. Historical Background
2. Powers of Competent Authorities in a MAP
C. The Process
1. Sources
2. Overview of the Process
3. Taxes and Issues Covered
4. Who Can Apply?
5. Timing of Requests
6. Unilateral Relief
7. The Role of Appeals
8. Pre-Filing and Post-Filing Meetings
9. Information Required
10. Protective Measures
11. Small Case Procedure
12. Denial of Requests
13. Processing of MAP Cases
a. Stages of Procedure
(1) Role of the Taxpayer
(2) Consultations with the Other Contracting State
(3) Decision on the Taxpayer's Claim
b. Withdrawal of MAP Request
c. Effect on Domestic Proceedings
14. Confidentiality in Competent Authority Proceedings
15. Interest on Deficiencies and Refunds
D. Arbitration
1. Background: Luxembourg Treaties
2. Arbitration Procedures
100:IV. Advance Pricing Agreements
A. Introduction
B. Scope of APAs
C. Exchange of Information on APAs
100:V. Consultation Between Competent Authorities Regarding Treaty Interpretation or Application
A. In General
B. Mutual Agreement Between Luxembourg and the United States
100:VI. Exchange of Information
A. In General
B. Exchange of Information Under Income Tax Treaties
1. Exchange of Information Under the OECD Model Treaty
a. Taxpayers Covered
b. Taxes Covered
c. Nature of Information
2. Exchange of Information Under the OECD Convention on Mutual Administrative Assistance in Tax Matters
a. Exchange of Information on Request
b. Spontaneous Exchange of Information
c. Automatic Exchange of Information
d. Luxembourg Reservations
C. The Luxembourg-U.S. Income Tax Treaty
D. Exchange of Information Under the Luxembourg–U.S. Model 1 Intergovernmental Agreement — Foreign Account Tax Compliance Act (FATCA)
E. Exchange of Information Under the OECD Common Reporting Standard (CRS) and Directive 2014/107/EU
F. Exchange of Information Under the European Union Arbitration Convention
Chapter 110 — MEXICO
110:I. Introduction
A. In General
B. Provisions Relating to the Competent Authority in Mexico's Income Tax Treaties
1. Comparison to the OECD Model
2. Variations Among Mexico's Treaties
110:II. The Competent Authority of Mexico
A. Identification
B. Functions in General
110:III. The Mutual Agreement Procedure for Taxpayer Cases
A. In General
1. Historical Background
2. Powers of Competent Authorities in a MAP
3. Possibility of Taxpayer-Initiated Adjustments
4. Statistics on MAP Cases
B. Types of Cases
1. Allocation Cases
2. Non-Allocation Cases
C. The Procedure
1. Sources of Official Information on the Procedure
2. Taxes and Issues Covered
3. Who Can Apply?
4. Timing of Requests
a. In General
b. Statute of Limitations and Other Procedural Limitations
(1) In General
(2) Treaty Provisions
(3) Opening Barred Assessment Periods
(4) Keeping Years Open
5. Unilateral Relief
6. The Role of Appeals
7. Pre-Filing and Post-Filing Conferences
8. Information Required
9. Protective Measures
10. Small Case Procedure
11. Simultaneous Appeals Procedure
12. Denial of Requests
a. Basis for Denial
b. Appeal Rights
c. De Minimis Amounts
13. Processing of MAP Cases
a. Stages of Procedure in Mexico
(1) Examination of the Taxpayer's Claim
(2) Preparation of Mexico's Position
(3) Negotiation
(4) Decision on the Taxpayer's Claim
b. Withdrawal of MAP Request
c. Effect on Domestic Proceedings
d. Court Proceedings
e. Implementation of a MAP Agreement Within Mexico
14. Confidentiality in Competent Authority Proceedings
a. Confidentiality of Returns and Return Information
b. Communication of Taxpayer Information Between Competent Authorities
c. Nondisclosure by Competent Authorities
15. Interest on Deficiencies and Refunds
16. Penalties
17. Repatriation of Funds After Reallocation
18. Accelerated Competent Authority Procedure
D. Arbitration
1. Provisions in Mexico's Income Tax Treaties
2. Arbitration Procedures Under Other International Agreements to Which Mexico Is a Party
3. Need for Arbitration
E. Protecting the Availability of Foreign Tax Credits
110:IV. Advance Pricing Agreements
A. Introduction
B. Scope of APAs
C. Duration
D. Retroactive Effect
E. Timeframe for the Process
F. Pre-Filing Meeting
G. Preparation and Filing
H. Evaluation of an APA Application
I. Documentation Requirements
1. General Information
2. Specific Information
3. Functional Analysis
J. Case Management Plan
K. Liaison with Other Competent Authorities
L. Compensating Adjustments
M. Withdrawal from the APA Process
N. Monitoring of Implementation by the Taxpayer of an APA
O. Renewal of an APA
P. Small Business APAs
110:V. Consultation Between Competent Authorities Regarding Treaty Interpretation or Application
Introductory Material
A. In General
B. Public Disclosure of Consultations
C. Legal Effect of Consultations
110:VI. Exchange of Information
A. Exchange of Information Outside of International Agreements
B. Exchange of Information Under Income Tax Treaties
1. Scope of Treaty Provisions
a. Taxpayers Covered
b. Taxes Covered
c. Officers Responsible for Exchanging Information
2. Types of Exchanges
a. In General
b. Automatic Exchange of Information
c. Spontaneous Exchange of Information
d. Specific Request for Information
e. Industry-Wide or Issue-Specific Exchange of Information
f. Exchange of Information About Laws or Official Guidance
3. Simultaneous Examination Programs
a. General Purpose
b. Specific Objectives
c. Procedures
d. Disclosure of Information
4. Responding to Specific Information Requests Under Tax Treaties
a. Specificity of Request
b. Use of Revenue Powers to Obtain Information
c. Mutuality Clause
5. Business Secrets
6. Restrictions on the Use and Disclosure of Exchanged Information
C. Exchange of Information Under Tax Information Exchange Agreements
1. Taxpayers Covered
2. Taxes Covered
3. Nature of Information
4. Types of Exchanges
5. Procedure for Exchanges
6. Exchange of Information Programs
D. Exchange of Information Under FATCA IGA Concluded with the United States
1. Introduction
2. Implementation of the FATCA IGA in Mexico
3. Explanation and Commentary of FATCA IGA
E. Exchange of Information Under the CRS
1. Introduction
2. Implementation of the CRS in Mexico
110:VII. Assistance in Tax Collection
Chapter 115 — THE NETHERLANDS
115:I. Introduction
115:II. The Dutch Competent Authority
115:III. The Mutual Agreement Procedure in Taxpayer Cases
A. The Process
1. The Request
a. Who Can Apply?
b. Issues Covered in a MAP
c. Form and Content of Request
d. Timing of Request and Limitations
2. The Course of the Procedure
a. Timeframe
b. The Accelerated Competent Authority Procedure
c. Concurrence of Objection and Appeal Procedure and the MAP
d. Taxpayer's Participation
3. The Outcome
a. Extension for Payment, Transfer Pricing Adjustments, Interest Charges, and Penalties
b. Corresponding Adjustments
c. Secondary Adjustments
d. Procedure If an Agreement Is Achieved
e. Procedure If No Agreement Is Achieved
B. Netherlands-U.S. Administrative Procedures
C. Arbitration
115:IV. Advanced Pricing Agreement
Introductory Material
A. Organization
B. Unilateral Versus Bilateral APAs
C. Scope of APAs
D. Duration
E. Retroactive Effect
F. APA Request
G. Service Companies APA
H. Dutch Substance Requirements
I. Pre-Filing Meeting
J. Case Management Plan
K. Small Business APA
115:V. Exchange of Information
Introductory Material
A. Domestic Law
B. International Agreements
C. Automatic Exchange of Tax Rulings with Germany
D. Automatic Exchange of Tax Rulings and APAs
E. Exchange of Information Under FATCA IGA Concluded with the United States
1. Introduction
2. Implementation of the FATCA IGA in the Netherlands
3. Explanation and Commentary of FATCA IGA
F. Exchange of Information under the CRS
1. Introduction
2. Implementation of the CRS in the Netherlands
3. Explanation and Commentary of the CRS
G. CbC Reporting
115:VI. International Investor's Desk
Chapter 120 — NEW ZEALAND
120:I. Introduction
120:II. Competent Authority of New Zealand
120:III. The Mutual Agreement Procedure for Taxpayer Cases
Introductory Material
A. General Background
B. Powers of the Competent Authority
C. Types of Cases
1. Allocation Cases
2. Non-Allocation Cases
D. Interest on Deficiencies and Refunds, and Penalties
E. Program Evaluation
F. Self-Adjustment
120:IV. The Process
A. Sources
B. Taxes and Issues Covered
C. Who Can Apply?
D. Timing of Requests
E. Role of the IRD's International Audit Team
F. Objections and Appeals
G. Pre-Filing and Post-Filing Conferences
H. Presentation of Case
I. Small Case Procedure
J. Justification of Claim Under a Treaty
K. Appeal Rights
L. Arbitration
1. The OECD Position
2. Need for Arbitration
120:V. Advance Pricing Agreements
120:VI. Consultation Between Competent Authorities Regarding Treaty Interpretation or Application
120:VII. Exchange of Information
A. In General
B. Spontaneous Exchange of Information
1. In General
2. Industry-Wide and Issue-Specific Exchanges of Information
3. Exchanges Regarding Changes in Tax Laws
C. Specific Requests for Information
1. Specificity of Request
2. Use of Revenue Powers to Obtain Information
3. Mutuality Clause
D. Automatic Exchanges of Information
E. Restrictions on Use and Disclosure of Exchanged Information
1. In General
2. Non-Disclosure to Third Countries
3. Business Secrets
F. Simultaneous Examination Programs
1. Definition
2. Specific Objectives
3. Procedures
4. Disclosure of Information
G. Exchange of Information Under FATCA IGA Concluded with the United States
1. Introduction
2. Implementation of the FATCA IGA in New Zealand
H. Exchange of Information Under the CRS
1. Introduction
2. Implementation of the CRS in New Zealand
120:VIII. Assistance in Collection
A. Introduction
B. Background
C. Article 27 of the OECD Model Treaty
D. Purposes of Assistance in Collection
E. Scope of Assistance in Collection
F. Assistance in Collection Articles in New Zealand
Chapter 125 — NORWAY
125:I. Introduction
125:II. Competent Authority
A. General
B. Identification of the Competent Authority
C. Article 25 of OECD Model Convention
1. The Basic Text
2. Norway's Adherence to the Model Convention
125:III. Sources of Law and Rules of Interpretation
A. Rules of Interpretation — International Law
B. The OECD Commentary on the Model Convention
C. The MEMAP
D. MAP Practice
E. Procedural Aspects of MAP Cases
125:IV. MAP — Taxpayer Cases — Requirements for Initiating the MAP
A. Introduction
1. The Categories of Mutual Agreements Covered by the MAP
2. Basic Requirements for MAP Taxpayer Case
B. Taxpayer Must be Norwegian Tax Resident
C. Probable Incorrect Taxation
D. Corresponding Adjustments — Article 9(2)
E. Request for MAP — Sufficient Information to “Present the Case”
F. Time Limits to Present the Case to the Competent Authority
G. “Notification” of the Action
H. Treaties with a Fixed Time Limit for Requesting MAP
I. Treaties without a Fixed Time Limit for Presenting the Case
125:V. Responsibilities and Powers of Competent Authorities in a MAP
125:VI. The Relationship Between Domestic Remedies and the MAP
125:VII. The Rights of the Taxpayer
125:VIII. Implementation of the Mutual Agreement
A. Treaties Explicitly Stating that No Time Limits Apply
B. Treaties Containing Time Limits
C. Treaties that Are Silent Regarding Time Limits on Implementation
D. Legal Status of Mutual Agreements
125:IX. Advance Pricing Agreements
Introductory Material
A. Unilateral APAs — Binding Advance Tax Rulings for Intra-Group Sales of Natural Gas
B. Bilateral APAs in Norway
C. Request for a Binding Prior Statement from the Tax Authorities
125:X. Exchange of Information — Model Convention Article 26
A. In General
B. Exchange of Information under Income Tax Treaties
C. Three Forms of Information Exchange: On Request, Automatic and Spontaneous
D. Exchange of Information Under FATCA IGA Concluded with the United States
1. Introduction
2. Implementation of the FATCA IGA in Norway
3. Explanation and Commentary of the FATCA IGA
E. Exchange of Information Under the CRS
1. Introduction
2. Implementation of the CRS in Norway
3. Explanation and Commentary of the CRS
125:XI. Tax Information Exchange Agreements (TIEAs)
125:XII. Assistance in Tax Collection
A. In General
B. Bases for Assistance in Tax Collection
1. Internal Norwegian Legislation
2. The Nordic Agreement on Assistance in Tax Collection
3. The OECD Model Tax Treaty Article 27
4. Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters
125:XIII. FATCA Intergovernmental Agreement (IGA) Between Norway and the United States
A. Introduction
B. Implementation of the FATCA IGA in Norway

Working Papers

Table of Worksheets
Worksheet 1 General Format of a MAP Request
Worksheet 2 Sample Mutual Agreement on Arbitration
Worksheet 3 U.S. Internal Revenue Service, “U.S., Luxembourg Agree on Interpretation of Tax Treaty's Transition Rules,” News Release IR-2001-108 (11/9/01)
Worksheet 4 Protocol of May 20, 2009, to the Luxembourg-U.S. Income Tax Treaty, Pertaining to Exchange of Information
Worksheet 5 Form 777E: International Exchange of Information on Advance Cross-Border Rulings and Advance Pricing Agreements
Worksheet 31 Electronic Resources Relating to the Dutch Competent Authority
Worksheet 41 Transfer Pricing Guidelines (IRD Tax Information Bulletin: Vol 12, No 10 (October 2000)), at paras 25 to 33
Worksheet 42 New Zealand Inland Revenue Website, “Advance Pricing Agreements”
Worksheet 43 U.S. Internal Revenue Service, “U.S.-New Zealand: Mutual Agreement Regarding Treatment of Income Derived Through Certain Fiscally Transparent Entities.” News Release IR-2005-15 (2/10/05)
Worksheet 44 Q&A: How to Apply for a Competent Authority Determination to Secure a 0% Withholding Rate for Dividends Under Article 10(3)(c) of the New Zealand-Australia Income Tax Treaty
Worksheet 45 New Zealand's Tax Treaties
Worksheet 46 OECD, New Zealand MAP Program Statistics for Reporting Period 2010