The of the taxpayer is generally limited to

The OECD Model system contains aforementioned ”mutual
agreement procedure”-MAP and an arbitration procedure. “MAP represents
negotiations between the ”competent authorities” of the contracting states
with a view to secure the uniform application of the Tax Convention in both
Article 25 paragraph 3 of the OECD Model Tax Convention (hereinafter ”OECD
MC”) prescribes that the competent authorities will try to settle any
difficulties or doubts arising as to the interpretation or application of the
Convention. “Initiation for MAP can come either from the contracting country
or, as it is prescribed in the Article 25, paragraph 1, from the tax payer in
case he feels that actions of one or both of the contracting states result or
will result in taxation that is not in accordance with the provisions of the
Convention.”2 In
that case, there is a possibility provided for him to present his case before
the competent authority of the contracting state in which he resides. After
”official complaint” is filed, it is up to the tax authorities to reach a
final conclusion whether or not there has been infringement of the
international tax treaty obligation.


What is also important to mention is the fact that by
initiating ”negotiations between the states” taxpayer does not lose the right
to seek a legal protection under a local legal system of the contracting state,
consequently leading to possible conflict in case of two different
resolutions.”In order to prevent this scenario, it is usually demanded from
the taxpayer to accept the agreement and withdraw his lawsuit before the
national court.”3
Further involvement of the taxpayer is generally limited to presenting the taxpayers’
views and assisting in the fact-finding.”Taxpayers may also be invited to make
a presentation before the competent authorities, where appropriate, by
submitting both in writing and /or orally their view regarding the relevant
facts of their arguments, in order to ensure a common understanding of the
facts of a particular case”.4
One of the most important shortcomings of earlier explained MAP is certainly
its long duration and costs of the procedure, both for the states and the taxpayer.

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drawback of the MAP is the fact that tax authorities, even though they need to
do everything in their power to reach a mutual agreement, are not legally bind
to reach the final conclusion. However, in order to remedy this limitation,
OECD MC has foreseen a possibility for the taxpayer to start an arbitration
process in case that taxpayer has presented a case to the authorized authority on
the basis that actions of the one or both contracting states resulted in
unlawful taxation or in situation where competent authorities were unable to
reach an agreement regarding the case within the two years from the date when
all necessary information were provided to them.


process is available for the taxpayer only when competent authority has
initiated a mutual agreement process and the tax problem has not been mutually
solved, resulting in a situation where, if competent authorities have reached
an agreement that is not to the taxpayer’s satisfaction, he cannot bring his
case to arbitration.”5


Arbitration Convention


The Convention regulates
dispute resolution procedures in case of double taxation occurrence between
connected EU enterprises or between EU enterprise and its permanent
establishment in another EU country. The dispute can be settled through three
different forms; unilateral relief, MAP and arbitration. Similar to OECD Model
system, the scope of taxpayer’s participation in the proceedings is rather
narrow. The Taxpayer has the right to present his case before the competent
authority if he considers that the principles of the Convention have not been observed
by a contracting state. Like OECD system, the Convention also allows
enterprises to provide relevant documentation regarding the dispute.”Each of
the associated enterprises may, at its own request, appear to be represented
before the advisory commission.”6


The time frame of the stages
of the procedure is similar; the taxpayer has three years to submit the case.
In the further period of six months arbitration commission has to deliver its
decision and finally, another six months is awarded to the authorities to
decide whether they will accept the arbitration ruling or will seek alternative


In summary, similar position
of the enterprises under both OECD Model system and EU Arbitration Convention
asks for revaluation of the existing legal instruments and the substantial
amendments in the field of taxpayer’s rights which would in the end create more
balanced, coherent system.


1 Lang, M., Zuger, M., Settlement
of Disputes… Ibid. p. 18


3 OECD Commentary Art. 25/31

4 Lang, M., Owens, J., International
Arbitration in Tax Matters, IBFD, Amsterdam, 2015, p. 291

5 Limor, L., Taxpayer`s
Lack of Standing in the International Tax Dispute Resolutions: An
Analysis Based on the Hybrid Norms of International Taxation, Pace Law
Review, 2015, p. 8

6 Lang, M., Zuger, M., Settlement
of Disputes… Ibid. p. 293


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