Mutual Agreement Procedure Directive

In particular, Article 19 of the compulsory arbitration procedure must be mandatory if the competent authorities are unable to reach an agreement on the settlement of a case within two years of their start. This is a significant restriction on POPs cases in the past, as the competent authorities were only required to try to resolve cases and disputes could be resolved indefinitely. Section 19 ensures that treaty disputes will be resolved within a specified time frame, making the MAP a more attractive option for taxpayers. In addition, sections 20 to 25 provide for the practical functioning of arbitration. In the past, it was often practical constraints or a lack of agreement on how to proceed that blocked the solution. The decree applies to any application for mutual agreement procedure (MAP) filed from 1 July 2019 with respect to disputes relating to the tax treatment of income or capital collected on income or capital acquired on the date of the beginning of the financial year or after 1 January 2018. The law provides for a simplified procedure for individuals and small and medium-sized enterprises by allowing them to file their complaint, respond to a request for additional information and make withdrawals from the Luxembourg administration of direct tax only if the person concerned is based in Luxembourg. The tax authorities must inform the relevant EU Member States within two months of receiving these notifications. (i) If the complaint has been dismissed by at least one competent authority, you will make a decision on whether the appeal will be accepted within six months of its inception. If the complaint is accepted, the POP is opened by the direct tax authority or the competent authority of each Member State concerned. If none of the relevant authorities initiate the proceedings within a specified time frame, the Advisory Committee will issue an opinion on the resolution of the matter. It should also be noted that the introduction of a complaint in accordance with the provisions of the Law terminates any other proceedings on the same contentious subject and is initiated on the basis of another agreement or convention, such as the 1990 EU Arbitration Convention (90/436/EEC) or a double taxation convention. Even in the event of an arbitration request, the EU review found that there could be many shortcomings in the system, including delays or lack of setting up the advisory committee and the lack of agreement on the appointment of the chairman of the advisory committee that delays or prevents the procedure.

Historically, domestic tax remedies have been seen as the first approach to resolving international tax or transfer pricing disputes.

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