New European Tax Dispute Resolution System to Take Effect by June 30, 2019

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By Anna Massoglia

Employers and employees, by June 30, 2019, are to have the option of arbitration to resolve double-taxation disputes with European Union member states, under a new dispute resolution system formally approved in a directive by EU finance ministers Oct. 10, a European Commission news release said.

Dispute resolution mechanisms for resolving double-taxation issues in EU member states are to be extended to employers and individuals under the new system, the finalized directive said. EU member states may put the directive into effect as early as January 2018 and would have until June 30, 2019, to incorporate the provisions of the directive into their national laws.

The new dispute resolution system would apply to all taxpayers subject to income taxation in EU member states covered by bilateral tax treaties and the EU Arbitration Convention, the directive said. Under the new dispute resolution system, employers are to be able to submit complaints to tax authorities of EU member states through a mutual agreement procedure. Each tax authority is to be required to acknowledge receipt of the complaints and inform applicable authorities of the other member states within two months from the receipt of any complaint meeting the directive’s criteria. Under the current system, EU member states resolve double-taxation disputes through bilateral treaties.

If EU member states do not resolve the dispute through the mutual agreement procedure within two years, or up to three years with written justification of a competent authority, the case may advance to a dispute resolution procedure. Advisory or alternative dispute resolution commissions to hear double-tax disputes are to be required by each EU member state’s national laws under the new system, the directive said. An advisory panel with a chair, up to two independent arbitrators, and up to two representatives of each EU member state would be appointed under the new system. Panel chairs of the advisory commissions are to be judges and the pool of independent arbitrators is to consist of independent persons of standing who are not employees of tax-advice companies and have not given professional tax advice, the directive said. An advisory commission or alternative dispute resolution commissions is required to notify competent authorities of recommendations for resolution of each question in dispute within 6 months after the date that commission was created, the directive said. Competent authorities are to impose a binding resolution to the dispute within 6 months after the commission’s notification of recommendations.

The new system is expected to resolve more than 900 outstanding double-taxation disputes between multinational companies and national tax authorities that are worth more than 10.5 billion euros ($12.4 billion), the European Commission news release said.

To contact the reporter on this story: Anna Massoglia in Washington at

To contact the editor on this story: Michael Baer at

For More Information

The text of the approved directive is available at

The European Commission news release regarding the directive is available at

More information on payroll issues in the European Union can be found in the International Payroll Decision Support Network country primers.

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