Mutual Agreement Procedure Definition

In addition to these developments, the European Union has proposed a new directive on the mechanisms for resolving disputes on double taxation in the European Union, which aims to resolve cases of double taxation within the EU by mutual agreement between member states. This could become, when the time comes, another instrument that EU taxpayers will be able to access when the time comes. [3] The mutual agreement clauses of most DBAs contain specific deadlines for submitting applications. The double taxation agreement is available on the website of the Federal Ministry of Finance. Action 14 of the BEPS Action Plan aims, in particular, to improve the effectiveness of the Mutual Agreement Procedure (POP) in the settlement of contractual disputes and transfer pricing. How does MAP interact with internal disputes? In addition, the European Arbitration Convention provides for a procedure of mutual agreement on issues relating to the distribution of profits between associated companies and stable establishments. If Member States are unable to reach agreement on the elimination of double taxation within two years, a specific arbitration procedure to eliminate double taxation is required. The Arbitration Convention of the European Union (EU) establishes a procedure for settling transfer pricing disputes for EU member states. This procedure may apply in cases of double taxation between companies in different EU Member States. The Mutual Agreement Procedure (MAP) is a procedure negotiated between the competent authorities of the contracting states of a tax treaty. The aim is to resolve differences in interpretation and eliminate double taxation. The mutual agreement procedure is designed to determine the tax debt between two countries. The partners in the process are therefore the contracting countries concerned.

The applicant herself is not part of the proceedings. However, the applicant is regularly informed of the status of the procedure and the status of the procedure. In the vast majority of cases, countries reach an 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 …

For more information on applying for a POP and exceptions for individuals, see Chapter 3.4 of the Tax Administration Guidelines on the Procedure for Mutual Agreement in the Case of International Tax Disputes. The BZSt does not collect royalties for mutual agreement procedures (with the exception of prior price agreements; see fact sheet on advance price agreements). An application under the European Arbitration Agreement must contain the information and documents necessary for the procedure and be forwarded to the BZSt in three copies. Under the POP, the appropriate authorities are only required to exercise due diligence. If states fail to reach an agreement, the mutual agreement process will be closed without eliminating double taxation. In this case, the situation of the subject is settled in each state. The double taxation agreement is available on the website of the Federal Ministry of Finance. With respect to transfer pricing disputes, taxpayers can use a POP to resolve the potential double taxation resulting from a transfer pricing adjustment initiated by a country. Tax payers facing a transfer price adjustment can go to their country of residence to resolve any double taxation problems that may result from this transfer price adjustment.