EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 14.9.2009 
SEC(2009)1169 final 
  
COMMISSION STAFF WORKING DOCUMENT 
 
Accompanying the 
COMMUNICATION FROM THE COMMI SSION TO THE COUNCIL,  
THE EUROPEAN PARLIAMENT AN D THE EUROPEAN ECONOMIC AND 
SOCIAL COMMITTEE 
on the work of the EU Joint Transfer Pric ing Forum in the period March 2007 to March 
2009 and a related proposal for a revised  Code of conduct for the effective 
implementation of the Arbitration co nvention (90/436/EEC of 23 July 1990) 
 
Final Report of the EU Joint Transfer Pric ing Forum on the Interpretation of some 
Provisions of the Arbitration Convention 
 
{COM(2009)472 final} 
{SEC(2009)1168} 
 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
2. JTPF conclusions and recommendations ..................................................................... 5 2.1. Serious penalties......................................................................................................... .. 5 
2.2. Scope of the arbitration convention ............................................................................. 6 2.2.1. Thin capitalisation cases .............................................................................................. 6  
2.2.2. Transfer pricing triangular cases.................................................................................. 8 2.2.2.1. Definition of a transfer pricing triangular case ............................................................ 8 2.2.2.2. Considerations on the scope of  the arbitration convention .......................................... 9 
2.2.2.2.1. Background .......................................................................................................... ...... 9 
2.2.2.2.2. Considerations:..................................................................................................... .... 10 
2.2.2.3. First stage of the Arbitration Convention: MAP........................................................ 10 2.2.2.3.1. Possible approach to deal  with triangular cases ....................................................... 10 
2.2.2.4. Second stage of the Arbitr ation Convention in multilate ral or parallel bilateral 
procedures: mandatory arbitration ............................................................................. 12 
2.2.2.5. Role of the Taxpayer.................................................................................................. 13 
2.3. Interest charges dur ing MAP negotiations................................................................. 14 
2.4. Deadline for the setting-up of the advisory commission ........................................... 15 2.5. Independent persons of standing................................................................................ 16 2.5.1. List of independent persons of standing..................................................................... 16 
2.5.2. Independence............................................................................................................ .. 16 
2.5.3. Nationality of the independe nt person of standing .................................................... 18 
2.6. Date of admissibility of a case ................................................................................... 19 2.7. Interaction between MAP and judicial appeal ........................................................... 19 2.7.1. JPTF conclusions ....................................................................................................... 2 1 
3. Concluding remarks ................................................................................................... 21 
ANNEXES ........................................................................................................................ ....... 22 
Annex I: Summary table on serious pe nalties (Doc JTPF 007 Rev1 Back 2007) ................... 22 
Annex II: Summary table on thin cap questionnaire (Doc JTPF 018 Rev2 2007)................... 24 Annex III: Scope of the AC questionnaire............................................................................... 43 
 
EN 3   EN Annex IV: Questionnaire on MAPs and rela ted interest (Doc JTPF 010 Back 2008)............. 44 
Annex V: Number of pending cases under the AC at the end of 2007 (Doc JTPF 
016/Rev2/Back/2008) ................................................................................................ 49 
Annex VI: LIST OF INDEPENDENT PERSONS OF STANDING (Doc JTPF 
010/BACK/REV11/2005).......................................................................................... 70 
Annex VII: INDEPENDENT PERSON OF STANDING`S DECLARATION OF 
ACCEPTANCE AND STATEMEN T OF INDEPENDENCE.................................. 73 
Annex VIII: Questionnaire on th e inter-action between judici al appeals and the AC............. 74 
Annex IX: State of play of the implementa tion of the Code of Conduct related to the 
Arbitration Convention (Doc : JTPF/006/BACK/REV5/2006/EN) ........................... 88 
Annex X: JTPF proposal for a revised Code of Conduct......................................................... 97 
 
EN 4   EN 1. INTRODUCTION  
1. Under the Chairmanship of Mr. Bruno GI BERT, partner of CMS Bureau Francis 
Lefebvre and the Vice-Chairmanship of Mr.  Theo Keijzer, Vice-President Tax Policy 
in Shell International BV, the Netherla nds, for Business and Mr Roy Warden, 
Assistant Director for Her Majesty's Revenue and Customs (until March 2008) and Mr. Stefaan De Baets , First Attaché in the Belgian Federal Public Service Finance , 
for tax administrations, meetings of the JT PF were held in Brussels on 28 June and 
23 October 2007, on 21 February, 5 June, 27 and 28 November 2008. 
2. In its work programme for 2007/2008 (document JTPF/013/2007) the EU Joint 
Transfer Pricing Forum (JTPF or Forum) had identified several areas where some 
practical solutions could be found: the Ar bitration Convention, intra-group services, 
SMEs, Cost Contribution Arrangements and the monitoring of previous 
achievements. 
3. With the knowledge gained since the “C onvention for the elimination of double 
taxation in connection with the adjustment of profits of associ ated enterprises the 
“Arbitration Convention”
1 (or AC), entered into fo rce in 1995, the JTPF members 
were of the opinion that a common view of  interpretation of some provisions could 
usefully be addressed. The topics specifically identified were: interest 
charged/credited by tax administrations when a case is dealt with under the Arbitration Convention, the inter-action of  the AC and domestic litigation, the scope 
of the AC (triangular transf er pricing and thin capitalization cases), the functioning 
of the AC (rules about the deadline for the setting-up of the Advisory Commission 
and criteria for independ ent persons of standing). 
4. The present JTPF work supplements its first report on the same topic on the basis of 
which the Commission had prepared a Communication
2 including a Code of Conduct 
that was adopted by the Council3. 
5. The objective of the first report was to ensure a mo re effective and uniform 
application by all EU Member States of  the Arbitration Convention. The report 
established procedures to enable smooth and timely progression through the various 
stages of the Arbitration Convention. Th e report also contained a recommendation to 
EU Member States on the suspension of tax collection during cross-border dispute 
resolution procedures. 
6. This document reports on the achievements of the JTPF related to the interpretation 
of some provisions of th e Arbitration Convention. 
7. Once the report is agreed by the JTPF member s it is expected that the Commission 
will prepare a Communication on the work of the Forum covering the years 2007-
2008 and including in annex the present repo rt, the agreed report on penalties and a 
proposal for a revised Code of Conduct on the Arbitration Convention. At a second 
                                                 
1 OJ L/1990/225 of 20/08/1990 – Convention 90/436/EEC 
2 OJ C/2004/122 of 30/04/2004 p.45 
3 OJ C/2006/176 of 28/07/2006 p.8 
 
EN 5   EN stage Member States should at the Counc il level take actions to see the JTPF 
recommendations and conclusions implemented. 
2. JTPF  CONCLUSIONS AND RECOMMENDATIONS  
2.1. Serious penalties 
8. Article 8 (1) of the Arbi tration Convention states: 
"The Competent Authority of a Contracting State shall not be obliged to initiate the 
mutual agreement procedure or to set up the advisory commissi on referred to in 
Article 7 where legal or administrative proceedings have resulted in a final ruling that by actions giving rise to an adjustment of transfers of profits under Article 4 one of the enterprises concerned is  liable to a serious penalty". 
9. Article 8 (1) is supplemented by Individual Declarations made by each MS where it 
is explained what they consid ered to be a serious penalty. 
10. This topic was discussed on several occasi ons by the JTPF and in its summary report 
on penalties (doc.JTPF/002/2007/EN) the Forum made the following statement: 
"The Arbitration Convention currently excludes taxpayers who have incurred a 
serious penalty. The situati on at the moment under the Ar bitration Convention where 
27 different definitions of a serious penalty ex ist does not sit easily with the idea of a 
single market. Therefore the JTPF will in the future look at what precisely a serious 
penalty should be for the purposes of the Arbitration Convention. The idea behind this work would be to clarify what a serious  penalty is in terms of transfer pricing 
and to prevent taxpayers from being disadv antaged from different definitions within 
the EU. The JTPF will seek to define in which cases a penalty should be considered as serious".  
11. Subsequently MS were invited to inform  the JTPF on the number of cases where 
access to the Arbitration Convention was deni ed because a serious penalty had been 
applied (see annex 4.1) . At that time only two MS had denied access to the 
arbitration convention (twice in France and on some occasions in Spain-but no figure 
is available). However the Business memb ers expressed their concerns that this 
outcome did not reflect the pressure that  this Arbitration Convention provision can 
put on taxpayers to agree with a non arm's length adjustment. 
12. The JTPF recognised that several MS  having reflected on their Individual 
Declarations, had in fact de scribed penalties that should probably not be considered 
as "serious" within the context of Article 8.   
 
EN 6   EN JTPF conclusion:  
The JTPF cannot change specific provisions of the Arbitration Convention but considers 
that the aim of the Arbitration Convention is the elimination of the double taxation and 
that Article 8.1 provides for the application of judgment by the Competent Authorities 
and as such, it was agreed that the Foru m would recommend a liberal interpretation of 
the provision as follows. 
JTPF recommendation:  
As Article 8.1 provides for flexibility as re gards the refusal to give access to the 
Arbitration Convention due to the existen ce of a serious penalty and considering the 
practical experience acquired since 1995 the JTPF invites MS to clarify or revise their 
unilateral statements in Annex of the Arbitr ation Convention in order to better reflect 
that a serious penalty should only be applied in exceptional cases like fraud.
 
2.2. Scope of the arbitration convention 
2.2.1.  Thin capitalisation cases 
13. In its work programme the JTPF agreed to  examine the scope of the Arbitration 
Convention and its application to what are commonly known as thin capit alization 
cases. 
14. In order to assess the current position in the EU, MS completed a questionnaire (see 
annex 4.2)  to answer whether or not they cons ider a case of "thin capitalization" 
under several scenarios to be solvab le under the Arbitr ation Convention. 
15. From the table the JTPF concluded unanimously  that an adjustment arising in respect 
of the rate of interest fell  within the scope of the Ar bitration Convention. However 
differing views were held on the scope of the Arbitration Convention on any wider 
interpretation of the wording "financial relations" in Art 4 (1) in particular the quantum of the loan and the borrowing capacity. 
16. Differing views were also expressed on the in clusion of adjustment to profits arising 
as a result of the applicat ion of anti-abuse rules. 
17. Consequently the JTPF focused the deba te on linking the recommendation to the 
arm's length principle and giving clarity that financial relations include more than the 
rate of interest on a loan. To help clar ifying the situation MS were invited to 
complete a second table (see annex 4.3 ). On this basis the JTPF agreed the following 
recommendation on the scope of the provisions  of the Arbitrati on Convention related 
to financial transactions:   
 
EN 7   EN JTPF recommendation:4 
The Arbitration Convention (AC) makes cl ear reference to profits arising from 
commercial and financial relations but does not seek to differentiate between these 
specific profits types, to thus narrow th e scope of the AC. Th e JTPF recognises the 
broad scope of the AC and recommends that MS  do not seek to take a more restricted 
view of the type of profit arising from either commercial or financial relations to which 
the AC should apply. 
In particular the JTPF considers profit ad justments arising from financial relations 
including a loan and its terms and based on the arm's length principle are within the 
scope of Arbitration Convention. 
                                                 
4 Reservations on the scope of the AC: Thin Capitalisation 
Bulgarian reservation: Bulgaria holds the view that profit adjustments arising from an adjustment to the price of 
a loan (i.e. the interest rate) fall within the scope of the Arbitration Convention. On the contrary, 
Bulgaria considers that the Arbitration Convention do es not cover cases of profit adjustments based on 
adjustments to the amount of financing. In principle the grounds for such adjustments lay in the 
domestic legislation of MS. The operation of varying national rules and the absence of an 
internationally recognized arms’ length set of guidelines  to be applied to a business’ capital structure, to 
a great extent challenge the arms’ length character of profit adjustments based on adjustments to the 
amount of a loan. 
Czech reservation: The Czech Republic shall not apply the mutual  agreement procedure under the Arbitration 
Convention in case that is a subject to the anti-abuse rules under the domestic law. 
Dutch reservation: The Netherlands endorses the view that an adjustme nt of the interest rate (pricing of the loan) 
which is based on national legislation based on the arm’s length principle falls within the scope of the 
Arbitration Convention. Adjustments of the amount of the loan as well as adjustments of the 
deductibility of the interest based on a thin capitali zation approach under the arm’s length principle or 
adjustments based on anti-abuse legislation based on the arm’s length principle are considered to fall 
outside the scope of the Arbitration Convention. The Netherlands will preserve its reservation until 
there is guidance from the OECD on  how to apply the arm’s length principle to thin capitalization of 
associated enterprises. 
Hungarian reservation : Hungary considers only those cases fall w ithin the scope of the AC where double 
taxation is due to the adjustment of the interest rate of the loan and the adjustment is based on the ALP. 
Italian reservation:  Italy considers that the Arbitration Convention may be invoked in case of double taxation due 
to a price adjustment of a financial transaction not in accordance with the arm’s length principle. 
Conversely, it cannot be i nvoked to solve double ta xation arising from adjust ments to the amount of 
loans, or double taxation occurred because of the differences in domestic rules on the allowed amount 
of financing or on interest deductibility. 
Latvian reservation: Our understanding is that the Arbitration Convention cannot be invoked in case of double 
taxation arising as a result of application of general national legislation on adjustments of the amount of 
a loan or on deductibility of interest payments, that is not based on the arm’s length principle provided 
for in Article 4 of the Arbitration Convention. 
Therefore, Latvia considers that only adjustments of interest deductions performed under national legislation 
based on the arm’s length principle are within the scope of the Arbitration Convention. 
Polish reservation:  Poland considers that procedure stipulated by Arbitration Convention may be applicable only 
in the case of interest adjustments. While adjustments concerning amount of a loan should not be 
covered by the Convention. In our opinion it is quite impossible to define how capital structure should 
look in practice in order to be in line with arm's length principle. 
Portuguese reservation:  Portuguese Tax Administration considers that the Arbitration Convention is applicable 
to the remuneration of the loan but profit adjustments arising from corrections to the amount of a loan between associated companies are considered to be  outside the scope of the Arbitration Convention. 
Slovakian reservation
: We are of the opinion that an adjustment of the interest rate which is based on national 
legislation based on the arm’s length principle should fall within the scope of the Arbitration 
 
EN 8   EN  
2.2.2.  Transfer pricing triangular cases 
18. The Forum studied the potential of applyi ng the existing Arbitration Convention and 
related Code of Conduct to double taxation that resulted from the involvement of 
more than two parties to a transaction. This  issue was firstly tackled by a specific 
sub-group composed of business and tax administration members. The sub-group 
met in Brussels on 15th January 2008, 29t h April 2008 and 8th July, 2008 and sent 
its report to the JPTF in  August 2008. The report was fu lly endorsed by the Forum 
during its November 2008 meeting. 
19. This part of the report provides the c onclusions, guidelines and recommendations 
arrived at so far on how to approach a nd resolve potential double taxation in so-
called triangular transfer pricing cases (h ereafter referred to as triangular cases). 
From the outset, it should be clear that because each case is different, it is very difficult to draft overly pr escriptive guidelines and recommendations universally 
applicable. 
2.2.2.1.  Definition of a transfer pricing triangular case 
20. The JTPF concluded that to deal with the topic of transfer pricing triangular cases it 
was desirable to firstly agree on a defin ition which should be neither too broad nor 
too narrow. 
21. The agreed definition is 
 
A triangular case is a case where two stat es in a MAP cannot fully resolve any double 
taxation arising in a transfer pricing case wh en applying the ALP because an associated 
enterprise - as defined in the Arbitration Convention - situated in a third state and 
identified by both EU Competent Authorit ies (evidence based on the comparability 
analysis including a functional analysis a nd other factual elements) had a significant 
influence in contributing to a non arm’s length result in a ch ain of relevant transactions 
or commercial / financial relations and recogn ised as such by the taxpayer suffering the 
double taxation and requesting the MAP.  
 
22. Two types of cases were distinguished: 
• cases where all associated companies c oncerned are situated within the EU 
(hereafter referred to as  EU triangular cases); 
• cases where the associated company iden tified as being the source of non arm’s 
length results in a chain of relevant transactions or co mmercial / financial 
relations is situated outside the EU (h ereafter referred to as non-EU triangular 
cases). 
                                                                                                                                                         
Convention but the adjustments to profits arising as a result of the application of anti-abuse rules under 
domestic legislation should fall outside the scope of the Arbitration Convention. 
 
EN 9   EN 23. The present report only addresses EU tr iangular cases. The Forum has however 
decided to maintain the activities of the sub-group in order to submit its findings on 
non-EU triangular cases. 
2.2.2.2.  Considerations on the scope of  the arbitration convention 
2.2.2.2.1. Background 24. Article 4 of the Arbitration Convention contains i.e. the following provision: 
“The following principles shall be observed in the application of this Convention:  
1. Where:  (a) an enterprise of a Contracting State pa rticipates directly or  indirectly in the 
management, control or capital of an ente rprise of another Contracting State,  
or (b) the same persons participate directly or  indirectly in the management, control or 
capital of an enterprise of one Contrac ting State and an enterprise of another 
Contracting State,  
and in either case conditions are made or imposed between the two enterprises  (emphasis 
added)  in their commercial or financial relations  which differ form those which would be 
made between independent enterprises, then  any profits which would, but for those 
conditions, have accrued to one of the enterprises, but, by reason of those conditions, have 
not so accrued, may be included in the profits  of that enterprise and taxed accordingly”. 
25. This provision could be explained in such a way that the Arbitration Convention is 
only applicable to bilateral cases. 
26. However, article 6 of the Arb itration Convention provides:  
“1. Where an enterprise cons iders that, in any case to which this Convention applies, 
the principles set out in Article 4 have not  been observed, it may, irrespective of the 
remedies provided by the domestic law of the Contracting States concerned 
(emphasis added) , present its case to the Competent Authority of the Contracting 
State of which it is an ente rprise or in which its permane nt establishment is situated. 
The case must be presented within three ye ars of the first notification of the action 
which results or is likely to result in double taxation within th e meaning of Article 1. 
The enterprise shall at the same time notify the Competent Authority if other 
Contracting States may be concerned in the case  (emphasis added).  The Competent 
Authority shall then without  delay notify the Competent Authorities of those other 
Contracting States (emphasis added). 
2. …”. 
27. Also in line with the preamble of the Arbi tration Convention in which it is stated 
that: 
 
EN 10   EN “CONSIDERING the importance attached to  the elimination of double taxation in 
connection with the adjustment of pr ofits of associated enterprises (emphasis added),  
…”. 
28. Article 6 read in conjuncti on with the preamble of the Arbitration Convention could 
lead to the conclusion that the scope of the AC includes EU triangular cases. 
2.2.2.2.2. Considerations: 29. This conclusion is also in line with the statements made at the JTPF meeting of 23 
October 2007 concerning the adoption of a wide view about the transaction (" the 
arm’s length principle goes beyond two transactions ") and about the Arbitration 
Convention (" the aim of the Arbitration Convention  is to resolve double taxation 
related to Transfer Pricing and therefore we should not try to find arguments to 
prevent its application ") and " that the implementation of the Arbitration Convention  
leads to a lot of legal  problems as regards the interpreta tion of its provisions but as 
the supreme goal is the e limination of the double taxa tion, the JTPF should always 
assume a wide interpretation ". 
30. Drawing on the above mentioned elements the JTPF concluded that an approach to 
solve EU triangular cases under the Arbitr ation Convention is possible. To that 
extent all MS should agree that triangular cases are covered by the scope of the 
Arbitration Convention.   
JTPF conclusion: 
Considering that the Arbitration Convention  is a multilateral convention between MS 
with the ultimate aim to eliminate double t axation in connection with the adjustment of 
profits of associated enterprises. It is op en to MS to interpre t the provisions of the 
Arbitration Convention in a way consistent with the aim of eliminating double taxation. 
In accordance with that approach Member Stat es recognise the principle that all EU 
transactions involved in EU triangular case s fall within the scope of the Arbitration 
Convention.  
 
2.2.2.3.  First stage of the Arbitration Convention: MAP 
2.2.2.3.1. Possible approach to de al with triangular cases 
31. The JTPF identified three opt ions to deal with EU triangular cases under the 
Arbitration Convention.  
(1) Competent Authorities can decide to ta ke a multilateral approach (immediate 
and full participation of all Comp etent Authorities concerned); or 
(2) Competent Authorities can decide to st art up a bilateral procedure and should 
invite the third MS CA(s) to participate as (an) observer(s) to the MAP discussions, the two parties of the bilate ral procedure being the member states 
having identified (based on the compar ability analysis including a functional 
 
EN 11   EN analysis and other factual elements) the associated enterprise [as defined in 
the Arbitration Convention] situated in  another MS that had a significant 
influence in contributing to a non arm’s le ngth results in the chain of relevant 
transactions or commercial  / financial relations; or 
(3) Competent Authorities can decide to start up more than one bilateral 
procedure in parallel (po ssibly three or more) and s hould invite the respective 
third MS CA(s) to participate as (an) observer(s) to the MAP discussions. 
32. From the beginning of the procedure, the Co mpetent Authorities will agree which of 
the three approaches will be applicable. 
33. The Forum recognises that in a given situat ion (e.g. imminent resolution of the case 
or particularly complex transactions, …) it  may be appropriate to apply art. 7(4) 
(extending time limits) to agree a short extension.  
34. The JTPF noted that the monitoring of the Code of Conduct is an ongoing exercise. 
However, other than recommending that th e third MS(s) should be involved as soon 
as possible in the proceedings and discussions, it was agreed at this time not to give 
more specific guidance on the first stage of the procedure.   
JTPF Recommendation 
As soon as Contracting States Competent Authorities have agreed that the case under 
discussion is to be considered a triangular  case (as defined in 2.2.2.1 of the report) they 
should immediately invite the other EU Comp etent Autority(ies) to take part in the 
proceedings and discussions as (an) observer( s) or as (an) active stakeholder(s) and 
decide together which is their favoured approac h. To that extent all information should 
be shared with the other EU  Competent Authority (ies) th rough for example Exchange 
of Information. The other EU Competent Au thority should be invited to acknowledge 
the actual or possible involve ment of “his” taxpayer.  
 
 
2.2.2.3.2. Considerations about the possible consequences for the third state 
35. The timing and extent of the involvement of a third Member State(s) may vary. 
Initially (a) third MS CA(s) could be invited as (an) obs erver(s) during the first stage 
of the Arbitration Convention procedure (MAP). The status  of the observer may then 
shift to that of stakeholde r(s) depending on the development of the discussions and 
evidence presented. If that (those) third memb er State(s) want(s) to participate in the 
proceedings of the second st age (arbitration), it (they) has (have) to become (a) 
stakeholder(s). In that case, the JTPF notes that Art.7 (4) may  be applied in order to 
give any necessary time for the preparati on of a position paper by the third MS(s). 
However given that the third Member State( s) was (were) involved in the previous 
discussions any extension would be expected to be short. 
 
EN 12   EN 36. If the Third Member State(s) remain(s) thr oughout the discussions as (an) observer(s) 
only, that shall not have any consequence on the application of th e provisions of the 
Arbitration Convention (e.g. timing i ssues and procedural issues). 
37. Attendance in the role of observer does not bind the observer(s) Member State(s) to 
the final outcome of the Arb itration Convention procedure. 
38. Any exchange of information must comply  with the normal legal and administrative 
requirements and procedures. 
39. The presence of the observer(s) will provide  a wider context to the transaction being 
examined. However any provision of th e Arbitration Convention would not be 
applicable to (an) Observer Member Stat e(s). As regards the second stage of the 
Arbitration Convention that third State(s)  would not be bound by the opinion of the 
Advisory Commission (unless the observer(s) had agreed to in fact become (a) 
Contracting State(s) of the mutual agreement procedure). 
2.2.2.4.  Second stage of the Arbitration Conventi on in multilateral or parallel bilateral 
procedures: mandatory arbitration 
40. The third state(s) can only be  part of the procedures re lated to the second stage if 
it(they) has(have) decided to become (a ) Contracting State(s) of the mutual 
agreement procedure. 
41. If the Competent Authorities decide to take a multilateral approach, each of the 
Competent Authorities must be a stakeholder to ensure they can have full representation at any advisory commission. 
42. If an advisory commission is to be se t up under the multila teral approach, the 
Contracting States will have regard to  the requirements of Article11(2) of the 
Arbitration Convention, introdu cing as necessary additiona l rules of procedure, to 
ensure that the advisory commission, inclus ive of its Chairman, is able to adopt its 
opinion by a simple majority of its members. 
43. If the Competent Authorities decide to star t up more than one b ilateral procedure in 
parallel, advisory commissions for each sepa rate procedure will have to be set up. 
However, the following problems may well arise : the risk that the advisory 
commissions could reach conflicting opinions  delivered at differing times, increased 
costs, logistic difficulties in establishi ng advisory commissions -(more independent 
persons of standing, secretarial services  for each advisory commission, several 
Chairmen etc, …). The JTPF felt that the bila teral parallel proce dures would result in 
inefficiencies possibly leading to the non elimination of th e double taxation and 
possibly based on non arm’s length principles. 
44. For these reasons, the JTPF recommends applying a multilateral procedure to resolve 
the double taxation issues in  EU triangular cases.  
 
 
EN 13   EN JTPF Recommendation:  
Considering the pros and cons of the ab ove approaches the JTPF recommends applying 
a multilateral procedure to resolve the double taxation. However this should always be 
agreed by all Competent Authorities based on the specific facts and circumstances of the 
case. If a multilateral approach is not possi ble and a two (or more) parallel bilateral 
procedure is adopted, the Forum recommends  that all relevant Competent Authorities 
shall be involved in the MAP stage one discu ssions either as a Contracting State to the 
initial Arbitration Convention application or as (an) observer(s). 
 
2.2.2.5.  Role of the Taxpayer 
45. The JTPF recognises the key role of th e taxpayer in EU triangular cases. 
46. As soon as possible the taxpayer should inform  the tax administrations that (an)other 
party(ies) in (a) third MS(s ) is(are) involved. Without such  information the resolution 
of the case could be impossible due to the different deadlines . Additionally it is in the 
interest of both tax administrations and taxpayer(s) that a co-operative position is 
taken to achieve swift resolution. This implies the timely exchange of information and delivery of documentation by all st akeholders (including the Competent 
Authorities). 
47. Although the MAP is in essence a procedure between tax administrations, in view of 
the specific nature of the triangular cases, more involvement of the taxpayers in the 
MAP could be envisaged for example by pr oviding additional information requested 
and points of factual clarification. 
48. In this context it must also be added that  it is primarily for the taxpayer to identify 
the commercial/financial relationship(s) re sulting in double taxa tion. The taxpayer 
needs to provide a comprehensive analysis of  all relevant facts and present evidence 
based reasons as to which contracting Stat es should start the a ppropriate procedure 
adoption of the EUTPD-concept might be  quite helpful in this respect.  
 
JTPF Recommendation:
 
It is recommended that taxpayer(s) should , as soon as possible, inform the tax 
administration(s) involved that (an)other party(ies), in (a) th ird MS(s), could be involved 
in the case. That notification should be fo llowed in a timely manner by the presentation 
of all relevant facts and supporting document ation. Such an approach will not only lead 
to quicker resolution but also  guard against the non resolutio n of double tax issues by 
virtue of differing Member St ates` procedural deadlines.  
 
 
 
EN 14   EN 2.3. Interest charges during MAP negotiations 
49. The Forum considered the i ssue of interest ch arges and refunds during the time it 
takes to run and complete the MAP process (Doc.JTPF/016/2007/EN and Doc.JTPF/003/2008/EN). 
50. During its October 2007 meeting the JTPF recognised that: 
• MS interest provisions are part of the general administration rules governing the 
tax policy of a country; 
• interest charges are not put in place to put a penalty on the ta xpayer or to sanction 
a fault from the taxpayer; 
• the length of time the Arbitration Conven tion or MAP procedure takes is largely 
due to the actions of the tax ad ministrations not the taxpayer; 
• two periods for interest charged should be distinguished: one covering the period 
before the adjustment for which the tax admi nistration is fully entitled to receive a 
compensation for late payment (the so called accrual of interests for late payment) the second one covering interest charged (or to be charged if the payment was 
suspended) during the MAP negotiations (w here the taxpayer is requested to pay 
interest because the tax administrations try to determine between themselves where the tax should be paid). The JTPF disc ussions focus on this second type of 
interest charge; 
• As regards the possibility for the JTPF to adopt conclusions on such a topic, it 
must keep in mind that the recommendation from the JTPF to suspend tax 
collection was finally endorsed by the MS  in the Council and subsequently 
implemented through administrative or legislative amendments. This new issue would require the same approach; 
• The Forum recommendations would be ba sed on chapter IV, 4.64 to 4.66 of the 
OECD Guidelines; 
51. In February 2008, tax administrations were  asked to answer the question whether 
their tax system does foresee the reimburseme nt of interest incurred on the amount of 
taxes to be reimbursed to a taxpayer at  the end of a MAP procedure under the 
Arbitration Convention.  
52. From the table (see annex 4.4)  it can be seen that a large majority of MS do 
reimburse interest incurred on the amount of  taxes to be reimbursed to a taxpayer at 
the end of a MAP. 
53. From the table it can be also concl uded that MS have supplemented their 
administrative practice by suspending tax collection during the MAP process. MS 
report that at the conclusion of the MAP pr ocess the suspended tax is dealt with in 
the following ways: 
• tax released for collec tion or repaid without attracting any interest 
 
EN 15   EN • tax released for collection or repayment with interest 
• each case dealt on its merits in te rms of charging or repaying tax 
54. Based on these factual elements the JTPF makes the following recommendation:
   
JTPF conclusion
 
Considering that during MAP negotiations a t axpayer should not be adversely affected 
by the existence of different approaches on interest charges and refunds during the time 
it takes to run and complete the MAP process. 
JTPF recommendation  
JTPF recommends that MS should apply one of the following approaches: - Tax to be released for collection and rep aid without attracting any interest, or 
- Tax to be released for collection and repaid with interest, or - Each case to be dealt with on its merits  in terms of charging or repaying interest 
(possibly during the MAP process).   
2.4. Deadline for the setting-up of the advisory commission 
55. This issue is ruled by two articles  of the Arbitration Convention: 
Article 7 (1) says:  "If the Competent Authorities concern ed fail to reach an agreement that 
eliminates the double taxation referred to in Artic le 6 within two years of the date on which 
the case was first submitted to one of the Comp etent Authorities in accordance with Article 6 
(1), they shall set up an advisory commissi on charged with deli vering its opinion on the 
elimination of the double taxation in question". 
Article 9 (7) of the Arbitration Convention says that  "the Contracting States shall take all 
necessary steps to ensure that  the advisory commission meets without delay once cases are 
referred to it". 
56. The Code of conduct for the effective implementation of the Convention on the 
elimination of double taxation in connecti on with the adjustme nt of profits of 
associated enterprises provides for the following clarifications: 
• Under point 4.2 "Unless otherwise agr eed between the Contracting States 
concerned, the Contracting State that issued the first tax assessment notice , i.e. 
final decision of the tax administration on the additional income, or equivalent 
which results, or is likely  to result, in double taxa tion within the meaning of 
Article 1 of the Arbitrati on Convention, takes the initia tive for the establishment 
of the advisory commission and arranges fo r its meetings, in agreement with the 
other Contracting Stat e". 
 
EN 16   EN • Under point 4.3 "A case is considered to be referred to the advisory commission  
on the date when the Chairman confirms that its members have received all 
relevant documentation and informati on as specified under point 4.2 e)".  
57. From the above it was concluded that no cl ear deadline had been established for the 
setting-up of an advisory commission. 
58. This conclusion is further evidenced by the entries in the table in annex 4.5.  where it 
is documented that it takes much more than  three years to see a case solved whereas 
the Arbitration Convention was designed to  come to a quick resolution of the 
disputes. 
59. The absence of a clear deadline for the setting-up of the advisory commission is 
considered by the JTPF Business members as the major drawback of the Arbitration 
Convention. The JTPF came to a consensus to suggest the following recommendation:  
JTPF conclusion:
 
The JTPF considers the absence of a clear deadline for the se tting-up of the advisory 
commission as a major obstacle to a smooth functioning of the Arbitration Convention. 
JTPF recommendation  
The JTPF invites Member States to set up th e advisory commission no later than 
6 months following the expiration of the period mentioned in article 7. Where one Competent Authority does not take the neces sary actions another Competent Authority 
involved shall take the initiative. 
2.5. Independent persons of standing 
2.5.1.  List of independent persons of standing 
60. The Forum wished to review the criteria to be applied to ensure the competence and 
independence of those appointed. The JTPF invited, on regular basis, MS to update 
their list of independent persons of standing and to submit relevant CVs.  
61. Annex 4.6  encloses the updated list at  the beginning of June 2008. 
62. Several members, based on their experience wi th the second phase of the Arbitration 
Convention, emphasised the need to keep t hose lists well updated and to have CVs 
available in order to choose the most appropriate persons. 
2.5.2.  Independence 
63. In considering independence Article 9 says:  
1. The advisory commission referred to in Arti cle 7 (1) shall consis t of, in addition to 
its Chairman:  
 
EN 17   EN - two representatives of each Competent Authority concerned; this number may be 
reduced to one by agreement between the Competent Authorities,  
- an even number of independent persons of standing to be appointed by mutual 
agreement from the list of persons referred to in paragraph 4 or, in the absence of 
agreement, by the drawing of lots by the Competent Authorities concerned.  
2. When the independent persons of standi ng are appointed an alternate shall be 
appointed for each of them according to the rules for the appointment of the independent persons in case the independent persons are prevented from carrying out their duties.  
3. Where lots are drawn, each of the Co mpetent Authorities may object to the 
appointment of any particular independent  person of standing in any circumstance 
agreed in advance between the Competent Au thorities concerned or in one of the 
following situations:  
- where that person belongs to or is  working on behalf of one of the tax 
administrations concerned,  
- where that person has, or has had, a large hol ding in or is or has been an employee 
of or adviser to one or each of  the associated enterprises,  
- where that person does not offer a sufficient guarantee of objectivity for the 
settlement of the case or cases to be decided.  
4. The list of independent persons of stand ing shall consist of all the independent 
persons nominated by the Contracting Stat es. For this purpose each Contracting 
State shall nominate five pe rsons and shall inform the Secretary-General of the 
Council of the European Communities thereof.  Such persons must be nationals of a 
Contracting State and resident within the territory to which this Convention applies. 
They must be competent and independent . The Contracting States may make 
alterations to the lis t referred to in the first su bparagraph; they shall inform the 
Secretary-General of the Council of the European Communities thereof without delay.  
5. The representatives and independent pe rsons of standing appointed in accordance 
with paragraph 1 shall elect a Chairman fr om among those persons of standing on 
the list referred to in paragraph 4, without prejudice to the right of each Competent 
Authority concerned to object to the appoi ntment of the person of standing thus 
chosen in one of the situations referred to in paragraph 3. The Chairman must possess the qualifications required for appointme nt to the highest judicial offices in 
his country or be a jurisconsu lt of recognized competence.  
6. The members of the advisory commission sh all keep secret all matters which they 
learn as a result of the proceedings. The Contracting States shall adopt appropriate provisions to penalize any breach of secr ecy obligations. They sh all, without delay 
inform the Commission of the European Communities of the measures taken. The Commission of the European Communities shall inform the other Contracting States.  
7. The Contracting States shall take all necessary steps to ensure that the advisory 
commission meets without delay on ce cases are referred to it. 
 
EN 18   EN 64. The Code of conduct for the effective implementation of the Convention on the 
elimination of double taxation in connecti on with the adjustme nt of profits of 
associated enterprises does not provide additional information as regards the 
competence or independence requirements for the independent persons of standing. 
65. From the above provisions it can be conclude d that two levels in any assessment of 
competence and independence exist: a first assessment of independence and competence must be done by the MS before someone is put on its list and a second 
assessment by both States before someone is  selected to become a member of an 
advisory commission. Moreover it should not  be forgotten that the independence 
criteria should also be c onsidered again when appointin g a person of standing to the 
advisory commission. 
66. The Forum considered developing specific ru les that would facilitate the assessment 
of the competence of the independent pers ons of standing. However, the members, 
by consensus, agreed to examine this ques tion at a later stage:  when a few more 
cases will have been sent to advisory commissions. 
67. The JTPF also agreed that the absence of criteria to be applied for considering a 
person of standing to an advisory commi ssion as independent and competent can 
lead to problems delaying the setting-up of an advisory commission. 
68. Based on the experience gained by other or ganizations in charge  of (commercial) 
dispute resolution, as regards declarations of independence and absence of conflict of 
interests, the JTPF provided an example of notice ( see annex 4.7 ).  
 
JTPF recommendation:
 
The JTPF recommends using a standard notice where the selected independent persons 
of standing shall sign a d eclaration of acceptance and a statement of independence for 
the particular case.   
2.5.3.  Nationality of the indepe ndent person of standing 
69. Some Members wanted to cl arify whether a MS could no minate in the list of 
independent persons of standing also nationals from other MS. 
70. During its November 2008 meeting the JTPF concluded:  
 
JTPF conclusion:  
From the existing situation (see the names of the Netherlands independent persons of 
standing) it can be concluded that these persons do not h ave to be nationals of or 
resident in the nominating stat e but nationals of a Contractin g State and resident within 
the territory to which the Convention applies.   
 
EN 19   EN 2.6. Date of admissibility of a case 
71. The issue of the interpretation of the pr ovisions of the Arbitration Convention as 
regards the question to know from which date a case is admissible/covered by the 
Arbitration Convention once a c ountry joins the Convention. 
72. Article 18 says:  
"This Convention shall enter into force on the first day of the third month following 
that in which the instrument of ratification is deposited by the last signatory State to 
take that step. The Convention shall apply to proceedings referred to in Article 6 (1) 
which are initiated after its entry into force." 
73. A consensus could be found on th e following recommendation:  
 
JTPF recommendation:  
On the basis of Article 18 of  the Arbitration Convention the JTPF recommends that a 
case is covered by the provisions of the Ar bitration Convention when the request is 
timely presented after the date of entry in to force of the accession to the Arbitration 
Convention by the new member states, even if  the adjustment applies to earlier fiscal 
years.  
 
2.7. Interaction between MAP and judicial appeal 
74. The inter-action of domestic legal procedures with the Arbitration Convention is 
recognised by many observers as a difficult area. Some MS have previously 
attempted to clarify their pos itions so that taxpayers can  better understand the options 
open to them to resolve double taxation. Howe ver, not all MSs' positions are clear. 
The Forum has therefore decided first to clar ify the status quo a nd if possible identify 
improvements in this area that can be made  to ensure the better elimination of double 
taxation in the EU. 
75. Article 7 of the Arbitr ation Convention states: 
"1. If the Competent Authorities concerned fa il to reach an agreem ent that eliminates 
the double taxation referred to in Article 6 within two years of the date on which the 
case was first submitted to one of the Competent Authorities in accordance with Article 6 (1), they shall set up an advisory commission charged with delivering its opinion on the elimination of th e double taxation in question.  
Enterprises may have recourse to the reme dies available to them under the domestic 
law of the Contracting States concerned;  however, where the case has so been 
submitted to a court or tribunal, the term of two years referred to in the first 
subparagraph shall be computed from the date on which the judgment of the final 
court of appeal was given. 
 
EN 20   EN 2. The submission of the case to the advisory commission shall not prevent a 
Contracting State from initiating or conti nuing judicial proceedings or proceedings 
for administrative penalties in relation to the same matters. 
3. Where the domestic law of a Contrac ting State does not permit the Competent 
Authorities of that State to derogate from  the decisions of their judicial bodies, 
paragraph 1 shall not apply unless the associ ated enterprise of that State has 
allowed the time provid ed for appeal to expire, or has withdrawn any such appeal 
before a decision has been delivered. This  provision shall not affect the appeal if 
and in so far as it relates to matters ot her than those referred to in Article 6. 
4. The Competent Authorities may by mutual agreement and with the agreement of 
the associated enterprises concerned wai ve the time limits referred to in paragraph 
1.  
5. In so far as the provisions of paragraphs 1 to 4 are not applie d, the rights of each 
of the associated enterprises, as laid  down in Article 6, shall be unaffected." 
76. List of Member States having made a unila teral statement declaring that they will 
apply Article 7(3): 
In 1995:  
• France 
• and the United Kingdom 
In 2005:  
• Belgium, 
• the Czech Republic, 
• Latvia, 
• Hungary, 
• Poland, 
• Portugal, 
• Slovakia 
• and Slovenia 
In 2008:  
• Italy, 
• Lithuania, 
• And Malta. 
 
EN 21   EN 2.7.1.  JPTF conclusions 
77. The JTPF decided to attempt to clarify Me mber States' position over what is meant 
by Article 7(3) of the Arbitration and what it actually means to apply or not to apply 
that Article. To reach that goal the JTPF se nt a questionnaire in order to assess the 
situation prevailing in each Member State. 
78. The JTPF concluded that the answers in annex 4.8  clarify the situation prevailing in 
each Member State. 
3. CONCLUDING REMARKS  
79. The JTPF considers that the improvement  of the practical functioning of the 
Arbitration Convention is an ongoing exercise. Whilst it is  still open to debate what 
the future work areas for the Forum are from the written reports sent by the Member States, it can be seen that several areas still need to be discussed and clarified.  
80. It is also noted that further work is required on what if any guidance on non EU 
triangular cases is appropriate. 
81. The JTPF invites the Commission, Member States and the Council to take the 
necessary actions to implement its  conclusions and recommendations. 
 
EN 22   EN ANNEXES  
ANNEX I: SUMMARY TABLE ON SERIOUS PENALTIES (DOC JTPF  007  REV1 BACK 2007) 
Introduction and context 
This table provides information about whether access to the Arbitrati on Convention was ever 
denied to a taxpayer because of the existen ce of a serious penalty  (Article 8 of the 
Convention) as defined by the relevant Member States. 
Summary table: 
This table derived by Secretariat from Memb er States replies and describes the actual 
situation (at the end of June 2007). 
Member State Access to the AC 
was denied Access to the AC was 
not denied comments 
Austria  X  
Belgium  X No request received so far 
where a taxpayer has faced 
a serious penalty. 
Bulgaria NR NR  
Cyprus NR NR  
Czech Republic NR NR  
Denmark  X  
Estonia NR NR  
Finland  X  
France X  MAP under AC suspended 
until serious penalty is 
final. Two cases so far. 
Germany  X  
Greece  X No request received so far 
where a taxpayer has faced 
a serious penalty. 
Hungary NR NR  
Italy  X No request received so far 
where a taxpayer has faced 
 
EN 23   EN a serious penalty. 
Ireland  X  
Latvia NR NR  
Lithuania NR NR  
Luxembourg  X  
Malta NR NR  
Netherlands  X  
Poland  X No request received so far 
where a taxpayer has faced 
a serious penalty 
Portugal  X  
Romania NR NR  
Slovak 
Republic NR NR  
Slovenia NR NR  
Spain X   
Sweden  X No request received so far 
where a taxpayer has faced 
a serious penalty. 
United Kingdom  X No request received so far 
where a taxpayer has faced 
a serious penalty. 
 
NR= not relevant so far because the new MS has had no cases under the AC. 
 
EN 24   EN ANNEX II: SUMMARY TABLE ON THIN CAP QUESTIONNAIRE (DOC JTPF  018  REV2 2007) 
Thin capitalisation questionnaire 
In order to assess the current position in the EU , MS have agreed to say whether or not they 
consider a case of "thin capital ization" to be solv able under the Arbitr ation Convention. The 
JTPF considers that this analysis will be usef ul to both taxpayers and tax administrations. 
Different tax administrations have different ru les used to look at debt arrangements between 
associated persons. In some c ountries, "normal" transfer pr icing rules apply. In some 
countries, there are special rules. Some countries  have both. But all rule s tend to consider the 
problem in a similar fashion: the outcome must be that the debt arrangements reflect those 
which would have existed between third parties. 
By "thin capitalization" tax admi nistrations typically mean looki ng at the rate of interest 
charged between associated persons or the amount  of the debt on which interest is charged. 
When considering the amount of the debt, tax administrations look at the amount which could 
have existed at arm's length (b orrowing capacity) and also some tax administrations look at 
the amount of debt which would ha ve existed (borrowing capacity and attitude  to debt and/or 
risk.). 
With this in mind, the JTPF asks you to say wh ether or not you would a ccept a case into the 
AC where your tax administration: 
• reduces the rate of interest pa id on an inter-company loan (Q1) 
• reduces the amount of a loan on which intere st is paid because of the limited borrowing 
capacity of the debtor (Q2) 
• reduces the amount of a loan on which interest is paid because the de bt would not have 
existed for reasons unrelated  to borrowing capacity. (Q3) 
• reduces the amount of a loan on which interest is paid because the debt exceeds a thin cap 
ratio (Q4) 
Please say the reasons if your answer is negative. 
Finally, please say whether your view would di ffer if the actions above had been taken by 
another tax administration and you were being asked to give a corresponding adjustment. (Q5) 
Thin capitalisation table 
Updated on the basis of the MS replies a nd amendments after the October meeting 
Member 
State Question 1 Question 2 Question3  Question 4 Question 5 
Austria YES YES YES YES YES 
 
EN 25   EN Belgium YES Yes but on a 
case by case Yes but on a 
case by case Yes but on a case by 
case Yes but on a 
case by case 
Bulgaria Yes NA 
No specific 
legislation NA 
No specific 
legislation NA 
No specific legislation As regards the 
rate of interest 
paid on a loan 
(question n.1) 
Bulgaria would 
accept a case 
into the AC if 
actions had 
been taken by 
another tax 
administration 
 
Questions 2-4: 
No because it 
is not a 
question about 
the application 
of the arm's 
length principle
Cyprus Yes Yes Yes Not relevant. No thin 
cap rules in Cyprus. 
Normal transfer pricing 
rules apply. On a case 
by case No. In case of 
Q4 where the 
adjustment is 
solely based on 
a thin cap ratio 
it shall not be 
accepted under 
the AC. 
Czech Republic Yes in general NA NA Generally no  Generally no 
Denmark YES YES YES YES NO 
Estonia YES YES YES There are no thin 
capitalisation rules in 
Estonia, "normal" 
transfer pricing rules 
apply NO 
Finland YES YES YES No. There are no thin 
cap ratio rules in 
Finland Cases (1-3) 
will be 
accepted into 
the AC if we 
were being 
asked to give a 
 
EN 26   EN corresponding 
adjustment to 
the actions 
taken by 
another tax 
administration 
and if it is a 
question of the 
arm’s length 
adjustment. If 
the action taken 
by another tax 
administration 
is based on thin 
cap ratio rules 
(point 4), the 
case won’t be 
accepted into 
the AC solely 
on that basis 
France YES No specific 
legislation No specific 
legislation No specific legislation Yes 
Germany Yes but on a 
case by case Yes but on a 
case by case Yes but on a 
case by case Yes but on a case by 
case Yes but on a 
case by case 
Greece No specific 
rules 
In reply to the  
Thin Capitalization Questionnaire regarding the implementation of Arbitration Convention, we would like to inform you that the Greek tax legislation has no special thin capitalization rules and each case of loan agreement between associated enterprises is No specific 
rules No specific 
rules No specific rules No specific 
rules 
 
EN 27   EN examined, 
according to the arm’s length principle (ALP) that is foreseen in our taxation legislation. 
 
Furthermore, 
according to 
the income tax 
law provisions 
(§d, article 31, 
of law 
2234/1994) 
any kind of 
accrued 
interest on 
loans and 
credits, is 
deducted from 
the gross 
income. The 
amount of 
deducted 
interest, 
independently 
of the loan 
nature, is 
subject of 
substance that 
is examined 
from the 
competent 
controlling tax 
authorities 
Hungary YES We can not 
see the 
detailed 
background 
of the 
reduction of 
the amount of 
a loan. 
Hungary does We can not 
see the 
detailed 
background 
of the 
reduction of 
the amount of 
a loan. 
Hungary does YES Actually we 
have not yet 
such issues, but 
we would like 
to examine it 
further. 
 
EN 28   EN not apply 
such rules not apply 
such rules 
Italy Yes, of course. 
This is a 
transfer pricing 
issue. Not 
applicable (a 
recent law 
abolished 
Italian thin 
cap 
legislation) Not 
applicable (a 
recent law 
abolished 
Italian thin 
cap 
legislation) Not applicable (a recent 
law abolished Italian 
thin cap legislation) As for the 
pricing of the loan (question n.1), of course we would accept a case into the AC also if the actions had been taken by another tax administration. 
As for the 
amount of the loan (question n. 2-3-4), we would not accept to discuss the double taxation issue in the framework of the Arbitration Convention. 
Reason: It does 
not seem that there is a common agreement among EU Member States as to the fact 
that the ALP 
may be applied to thin cap domestic rules. Besides, also among those considering thin cap rules in the context of transfer pricing rules, there is disagreement 
 
EN 29   EN as to the 
identification of the cases in which thin cap rules were applied on the basis of the arm’s length principle or not. 
For this 
reason, 
the 
eliminat
ion of 
double 
taxation 
shall 
necessa
rily be 
agreed 
between 
compet
ent 
authorit
ies and 
cannot 
be 
decided 
by a 
third 
party, 
such as 
the 
advisor
y 
commis
sion 
Ireland Yes  No specific 
legislation No specific 
legislation No specific legislation Prepared to 
accept the case 
into the AC if 
the other 
Member State 
concerned 
agrees. Cases 
to be dealt with 
on the basis of 
trying to find 
 
EN 30   EN the arm's 
length profit. 
Latvia yes No No No Yes on a case 
by case under 
MAP 
Lithuania Yes No specific 
rules No specific 
rules No Case by case 
under MAP 
Luxembourg YES YES YES YES YES 
Malta YES YES YES YES YES 
Netherlands Yes, in case the 
tax 
administration 
reduces the rate 
of the interest 
paid, the case 
would be 
accepted into 
the AC No, if the 
amount of a 
loan on which 
interest is 
paid is 
reduced 
because of the 
limited 
borrowing 
capacity of 
the debtor the 
case will not 
be accepted 
into the AC. 
In order to try 
and find a 
solution to 
any double 
taxation 
resulting from 
this, these 
cases are 
accepted 
under a 
mutual 
agreement 
procedure on 
the basis of 
article 25, 
paragraph 3 
of the OECD 
Model Tax 
Convention 
(MTC).  No, in case 
the amount of 
a loan on 
which interest 
is paid is 
reduced 
because the 
debt would 
not have 
existed for 
reasons 
unrelated to 
borrowing 
capacity the 
case will not 
be accepted 
into the AC. 
In order to try 
and find a 
solution to 
any double 
taxation 
resulting from 
this, these 
cases are 
accepted 
under a 
mutual 
agreement 
procedure on 
the basis of 
article 25, 
paragraph 3 
of the OECD 
MTC No, in case the amount 
of a loan on which 
interest is paid is 
reduced because of the 
debt exceeding the thin 
capitalization ratio 
mentioned in article 
10d Wet op de 
Vennootschapsbelasting 
1969 (Dutch Corporate 
Tax Law) the case will 
not be accepted into the 
AC, nor will it be 
accepted under a 
mutual agreement 
procedure on the basis 
of article 25 of the 
OECD MTC In case another 
tax 
administration 
reduces the rate 
of interest 
based on their 
own national 
thin 
capitalization 
legislation (or 
interest cover 
ratio 
legislation) the 
case would be 
accepted into 
the AC 
In case another 
tax 
administration 
reduces the 
amount of a 
loan on which 
interest is paid 
based on their 
own national 
thin 
capitalization 
legislation the 
case would not 
be accepted 
into the AC. 
These cases are 
accepted under 
a mutual 
agreement 
procedure on 
 
EN 31   EN the basis of 
article 25, 
paragraph 3 of 
the OECD 
MTC 
Poland Yes, case 
concerning 
reduction of 
the rate of 
interest could 
be accepted 
into arbitration 
procedure No according 
to Polish tax 
rules, there 
are no 
administrative 
instruments 
that would 
influence the 
amount of the 
loan No according 
to Polish tax 
rules, there 
are no 
administrative 
instruments 
that would 
influence the 
amount of the 
loan NO according to Polish 
tax rules, there are no 
administrative 
instruments that would 
influence the amount of 
the loan, however if the 
debt exceeds a thin cap 
ratio, the interests paid 
cannot be deductible 
from the taxable 
income  in case of 
corresponding 
adjustment, 
the action of 
Polish 
administration 
would be the 
same, i.e. 
only cases 
concerning 
interest.  
Portugal YES No. 
The thin 
capitalization 
rules are not 
applicable to 
cases that 
involve UE 
entities  No. 
The thin 
capitalization 
rules are not 
applicable to 
cases that 
involve UE 
entities  No. 
The thin capitalization 
rules are not applicable to 
cases that involve UE 
entities  - Case 1 would 
be acceptable. 
- Cases 2-4 as 
far as the 
reduction of the 
amount of a loan 
on which the 
interest is paid is 
not made under 
the transfer 
pricing rules, 
they are not 
covered by the 
AC, so in 
principle they 
couldn’t be 
acceptable.  
Romania  
Yes, in general.  The interest 
expenses are entirely deductible in case the debt equity ratio is equal or less then 3. The debt equity ratio represents the ration  
Analysis on a 
case by case 
situation.   
Analysis on a 
case by case 
situation.  
Analysis on a case by 
case situation.  
Analysis on a 
case by case 
situation. 
 
EN 32   EN between the 
borrowed capital (with a reimbursement period over one year) and the registered capital, as a mean of values existing at the beginning and end of the period for which the profit tax is calculated. The borrowed 
capital is the 
total amount of credits and loans with reimbursement period over one year. In case the debt equity ratio is higher the three, the interest expenses as well as the net loss related to the exchange rate are not deductible. These last expenses are to be reported for the next period in the above-mentioned conditions. In case of bilateral or multilateral tax agreement, their provisions are superior to the provisions of the internal legislation. 
 
EN 33   EN  
Slovak 
Republic Yes No specific 
rules No specific 
rules No specific rules On a case by 
case 
Slovenia In general it 
would be 
accepted into 
AC Slovenia 
does not 
apply such 
instruments  Slovenia 
does not 
apply such 
instruments  Yes, but case by case  Case by case  
Spain YES YES 
Assuming 
there is no 
penalty YES 
Assuming 
there is no 
penalty This kind of provision 
is not applicable to EU 
companies YES 
Sweden YES YES YES YES Sweden would 
probably 
accept a case 
into the AC if 
the above 
adjustments 
were made by 
another MS 
United Kingdom YES YES YES "YES" ? 
 
Additional information:  
Bulgaria:  regulation on thin cap italization in Bulgaria  
According to the Corporate Income Taxation Act (CITA) interest expenses incurred by 
companies in Bulgaria are regulated for ta xation purposes. Art. 43, para. 1 of the Act 
stipulates that interest expens es, calculated as shown below, shall not be recognized for tax 
purposes in the year in wh ich they are accounted for: 
UIE = IE – (IR + 0,75 x FRPI), where: UIE are the unrecognized interest expenses; 
IE are the interest expenses dete rmined in accordance with para. 3; 
IR is the total amount of interest receipts; 
FRPI is the accounting financial result prior to any interest expenses and receipts. 
According to Art. 43, para. 3 of CITA interest expenses shall include a ny financial (interest) 
expenses in connection with borrowed capital fi nancing. The interest expenses, however, shall 
not include: 
 
EN 34   EN 1. interest under financial leas ing or bank credit, except where the parties to the transaction 
are related parties, or the leas ing, and the credit, respectively, has been guaranteed or secured 
or extended by order of a related party; 
2. penalty interest on delayed payments and indemnities; 3. interest that is unrecognized fo r tax purposes on other legal grounds. 
This rule shall not apply where: 
BC1 + BC2    EQ1 + EQ2,  
-------------- < 
= 3 x -------------, where 
2    2  
           
BC1 is the borrowed capital as at 1 January of the current year; 
BC2 is the borrowed capital as at 31 December of the current year; EQ1 is the equity as at 1 January of the current year; 
EQ2 is the equity as at 31 December of the current year. 
The interest expenses of the credit institutions shall not be regulated under the procedure set 
forth above. 
It is important to note that this rule applies to all companies subject to corporate taxation in 
Bulgaria irrespective of the fact whether the inte rest expenses have been incurred as a result 
of controlled or uncontrolled tran sactions. In other words, this rule is in place even if all 
interest expenses have been incu rred in arm’s length dealings.  
As regards debt arrangements between associated enterprises only the rate of interest charged 
is subject to regulation in Bulgaria under the tr ansfer pricing rules now in force. Under CITA 
the amount of loans granted betw een associated parties is not subject to limitation for the 
purposes of transfer pricing.  
Taking account of the above Bulgaria may only re duce (adjust) the rate of interest charged on 
an inter-company loan but is not allowed to  limit the amount of an inter-company loan. 
Therefore, in case of Bulgaria only the firs t of the presented four  hypotheses may fall under 
the AC. 
Reciprocally Bulgaria shall make  a corresponding adjustment in the first case, i.e. where the 
other tax administration has reduced the rate of  interest paid on an inter-company loan. For 
the time being Bulgaria is not willing to accept a case under the AC where the amount of an 
inter-company loan is adjusted by the foreign state. Otherwise Bulgaria will suffer a loss of tax revenue reducing the tax base of its companies by the amount of interest attributable to the 
 
EN 35   EN non-recognized portion of a granted loan, wh ich portion would have generated income if 
invested in a different manner. 
Cyprus:  
No provisions on thin cap, usual rules would apply, no experience with the AC, would be 
examined on a case by case. 
CZ: 
Comments to question 4: Under domestic law we apply strict thin cap. Ratio as an anti abuse 
rule. Therefore it is not acceptable to adjust amount  of a loan on which interest is paid due to 
exceeding thin cap ratio under AC (or under MAP). 
Comments to question 5: our view does not  differ if the actions mentioned in the 
questionnaire have been take n by another tax administration. 
France:  
1. Reminder of the new French system 
With Article 113 of the 2006 Finance Act, France radically reformed its system for combating 
the manipulation of financial charges, as pr ovided for under Article 212 of the General Tax 
Code. The new system came into force at the start of the financial year on 1 January 2007. 
Under the new Article 212, interest paid to asso ciated enterprises is deductible only up to an 
amount calculated on the basis of the annual aver age of the average effective rates applied by 
credit institutions for variable-rate business loan s with an initial duration of more than two 
years. If a higher rate is app lied, the company may nevertheless present evidence that this rate 
is not excessive in relation to the rate that  would have been charged by an independent 
financial institution or body under similar conditions. 
Furthermore, an enterprise is regarded as being under-capitalised if the interest due to 
associated enterprises simultaneously exceeds the following three ratios: a debt ratio, an 
interest coverage ratio and a ratio of interest  paid to associated companies. However, an 
enterprise regarded as being under-capitalised on the basis of the above ratios may present 
evidence to the contrary by demonstrating that its overall debt ratio is less than or equal to the 
overall debt ratio of th e group to which it belongs. 
These provisions apply to all inte rest due to directly or indirectly associated enterprises (with 
the exception of interest owed  by credit institutions, by corpor ate treasuries under a group's 
central management agreement or by a company in connection with the acquisition costs of 
leased assets). 
If a company is regarded as being under-capital ised on the basis of the three aforementioned 
ratios and has not presented any evidence to th e contrary, the portion of  the interest payment 
due to associated enterprises that exceeds th e highest of these three ratios may not be 
deducted in the financial year in question unl ess it is less than €150 000. The portion may be 
carried forward for deduction in subsequent fina ncial years, subject to  certain limitations and, 
where appropriate, with a 5% reduction. 
 
EN 36   EN 2. Can a mutual agreement procedure be re quested under the European Arbitration 
Convention for an adjustment on the ba sis of under-capitalisation legislation? 
For an adjustment by the French authorities  under the new Article 212 of the General Tax 
Code, we should distinguish between two different situations. 
• If the adjustment relates to the interest rate , the legislation allows the company to present 
evidence to the contrary. It must show that the interest rate charged on instalments paid by 
an associated enterprise is not excessive in  relation to the rate that would have been 
charged by an independent financial in stitution or body under similar conditions.  
This rule is consistent with the arm's length pr inciple as set out in Ar ticle 4 of the European 
Arbitration Convention. It is th erefore possible to initiate a mutual agreement procedure under 
the Convention for an adjustment under Articl e 212 of the General Tax Code to limit the 
interest rate. 
• If the adjustment is made on the basis of the above capitalisation ratios, the effect of the 
interest limitation is to defer the deduction and not to oppose it permanently. The portion 
of the interest payment not deductible imme diately may be deducted in the following 
financial year. The residual amount for the end of  that financial year may be deducted in 
subsequent financial years, su bject to the same conditions (with a 5% reduction made at 
the start of each of these subsequent years to represent the cost of time). 
If there is no double taxation, adjustments made  on the basis of the capitalisation ratios are 
unlikely to give rise to a mutual agreem ent procedure under the European Arbitration 
Convention. 
For adjustments made by another State , it is difficult to say wh at the situation would be 
because each case would require an examination of the under-c apitalisation legislation in 
force in that State. 
Nevertheless, the interest rate or the debt incurr ed by an enterprise vis-à-vis another enterprise 
that is part of the same group may be challe nged by initiating a mutual agreement procedure 
as provided for under the European Arbitration C onvention only if the legi slation in force in 
the State in question is base d on the arm's length principle 
Germany:  
It’s a difficult issue. The answer is Yes but on a case by case. We want to exclude cases where 
it was the application of anti abuse rules. 
Ireland:  
In order to assess the current position in the EU , MS have agreed to say whether or not they 
consider a case of "thin capital ization" to be solv able under the Arbitr ation Convention. The 
JTPF considers that this analysis will be usef ul to both taxpayers and tax administrations. 
Different tax administrations have different ru les used to look at debt arrangements between 
associated persons. In some c ountries, "normal" transfer pr icing rules apply. In some 
countries, there are special rules. Some countries  have both. But all rule s tend to consider the 
problem in a similar fashion: the outcome must be that the debt arrangements reflect those 
which would have existed between third parties. 
 
EN 37   EN By "thin capitalization" tax admi nistrations typically mean looki ng at the rate of interest 
charged between associated persons or the amount  of the debt on which interest is charged. 
When considering the amount of the debt, tax administrations look at the amount which could 
have existed at arm's length (b orrowing capacity) and also some tax administrations look at 
the amount of debt which would ha ve existed (borrowing capacity and attitude  to debt and/or 
risk.). 
Questions: With this in mind, the JTPF asks you to say whether or not you would accept a 
case into the AC where your tax administration: 
1. reduces the rate of interest pa id on an inter-company loan? 
Response: Ireland does not have legislation that reduces the rate on interest on 
inter-company loans for tax pur poses. Ireland does have legisl ation that provides that 
interest on a loan is to be treated as a distribution of profits rather than a tax 
deductible amount if the interest repres ents more than a reasonable commercial 
return for the use of the principal. As this relates to an arm’s length interest level, we consider that the Arbitrati on Convention is applicable. 
2. reduces the amount of a loan on which in terest is paid because of the limited 
borrowing capacity of the debtor? 
Response
: Ireland does not have this type of thin capitalization rule.  
3. reduces the amount of a loan on which interest is paid because the debt would 
not have existed for reasons unrelated to borrowing capacity. 
Response : Ireland does not have this type of thin capitalization rule.  
4. reduces the amount of a loan on which in terest is paid because the debt exceeds 
a thin cap ratio 
Response : Ireland does not have this type of thin capitalization rule.  
5. Say whether your view would differ if the actions above had been taken by 
another tax administration and you were being asked to give a corresponding 
adjustment. 
Response:  In relation to the four scenarios, where the conditions of Article 4 of 
the Arbitration Convention apply and the other Member State concerned is prepared to accept the case  into the Arbitration Convention, we would also be 
prepared to accept it into the Arbitrat ion Convention. We will deal with all 
cases on the basis of trying to find the arms' length profit and without regard to 
the nature of any specific th in capitalization rules of the other Member State. 
Netherlands:
 reasons to say no 
• A case will not be accepted into th e AC if the amount of a loan on which interest is paid is 
reduced because of the debt exceeding the thin  capitalization ratio mentioned in article 10d 
Wet op de Vennootschapsbelasting 1969 (Dutch Corporate Tax Law). The reason for this 
is that the OECD has not reached any conclusions in earlier OECD discussions on thin capitalization, because the OECD could not find  an at arm’s length measure to establish 
 
EN 38   EN the debt / equity ratio suitable for specific situations. As a result every member state 
applies its own rules. As long as there is a la ck of consensus between member states, these 
cases should in our view not  be accepted into the AC. 
• A case will not be accepted into th e AC if the amount of a loan on which interest is paid is 
reduced for reasons other than the national thin capitalization ratio mentioned in article 10d 
Wet op de Vennootschapsbelasting 1969 (Dutch  Corporate Tax Law). These cases are 
accepted under a mutual agreement procedure on the basis of article 25, paragraph 3 of the 
OECD MTC.  
Latvia:  
Latvia considers that it is necessary to exam ine the practice (jurisprudence, case law) of 
European Court of Justice in cases regarding th in capitalization. In our opinion, the questions 
which are in the scope of international agreements concluded between Member Sates of European Union are not in the scope of ECT a nd cannot be heard as cases in the Court of 
Justice. Therefore, we think that  to decide whether or not thin  capitalization should be solved 
under the Arbitration Convention it is necessary to study the case-law of the Court of Justice 
in this field. 
There are different regulations regarding transfer pricing and thin capitalization issues in the 
legislation of Latvia. Since in thin capitalization cases it is complicated to apply transfer 
pricing methods, Latvia considered that according to the arm’s length principle it is preferable 
to implement simpler methods for control of interest payments. 
These methods which are used in Latvia are similar to methods mentioned in the 
Questionnaire on Thin Ca pitalization. Although, Latvia does not reduce interest rates or 
amount of loan on which the interest is paid, according to the Law on Enterprises Income Tax 
the State Revenue Service of Latvia shall increa se the taxable income of company by interest 
payments: 
(a) which exceed the amount of interest pa yments calculated by applying previous 
month short-term credit rate in the cred it institutions specified by the Central 
Statistics Bureau for the taxation period and multiplied by 1.2; 
(b) in proportion to the degree to which the average amount of debt obligations in 
the taxation period (in respect of which the interest payments are calculated) exceeds the amount which is equal to f our times the amount of own capital 
reflected in the annual repor t of taxpayer, which is reduced by the conversion 
of long-term deposits into reserves a nd other reserves, which have not been 
created as a result of the division of profit. 
Since each member state has its own rules and me thods applicable to thin capitalization, the 
extension of Arbitration Convention on thin capitalization could be arranged by coming to 
mutual agreement on the approach which co uld be acceptable for all member states. 
Considering the OECD commentaries on the ar ticles of Model Tax C onvention, in case of 
thin capitalization to avoid double taxation member states s hould follow the principles set in 
Article 9 Paragraph 1 or Article 11 Paragraph 6.  
 
EN 39   EN At this moment, Latvia is not ready to gi ve approving or denying answer because the 
issue of the Arbitration Convention extension on thin capitalization needs to be examined more deeply. 
Oral statement:  national rules on Thin Cap exist but Latvia has no experience with the AC 
and therefore cannot answer the questions. 
Malta:
 
Malta does not have specific rules concerning Thin Capita lisation. Malta would, however, 
accept a case into the Arbitration Conventi on where profits of an enterprise are 
adjusted by the Maltese tax administration in the circumstances referred to in Article 4 of the 
Arbitration Convention since it reduces the: 
– rate of interest paid on an inter-company loan; 
– amount of a loan on which interest is paid because of the limited bo rrowing capacity of the 
debtor; 
– amount of a loan on which interest is paid because the debt would not have existed for 
reasons unrelated to borrowing capacity; 
– amount of a loan on which interest is paid  because the debt exceeds a thin cap ratio. 
Malta would also accept a case into the Arb itration Convention if the actions mentioned 
above had been taken by another tax admini stration and Malta was asked to give a 
corresponding adjustment. 
Poland:  
Issue of thin capitalization is recognized in Polish tax regula tions as capitalization by debt. 
Interest paid on such debt agreements are treat ed differently than dividends. Dividends shall 
not be considered the revenue earni ng costs in contrary to interest. 
If debt arrangements are between associated co mpanies and it will result in profit shifting 
between those companies, Polish tax administrati on will apply "normal" transfer pricing rules. 
However, those rules will include only cases rele vant to level of interest paid on the loan. 
Pursuant to specific Polish rules, in case of in terest adjustment, tax administration is bound to 
use the lowest interest rate - based on ar m's length rules. T hus, making corresponding 
adjustment by Polish tax administration, thos e provisions must be taken into account. 
In such circumstances, it is possible to accept the case concerning the rate of interest under 
Arbitration Convention. 
Portugal:  
The thin capitalization ru les are considered a sp ecific anti-abuse measure to counter practices 
related to excessive debt and are restricted only to re lated entities resident  in third countries. 
In what concerns abusive practices  concerning interest paid on loans by resident companies to 
EU related entities, namely wher e the loan in full or partly should be in substance qualified 
 
EN 40   EN fully or partly as equity the ta x administration is allowed to re -characterise the debt under the 
general anti-abuse provision. 
So, for the amount of the loan [question 2- 4] we could not accept to include the double 
taxation issues in the scope of the arbitra tion convention. 
Slovak republic:  
New domestic rules on thin capitalization approved in 2007 and amended in 2008 will be 
effective as of 1 January 2010. New thin cap rules are stipulated in the section 21 of the Income Tax Act and designed as anti-abuse meas ures. Under these rules, the amount of the 
tax-deductible interest paid out by the taxpayer to the lender is limited, provided the following 
conditions are met - direct or indirect capital share is minimum 25%, the debt-equity-ratio 
exceeds 6:1 and the average balance of  credits and loans exceeds 3 316 400 €. 
Currently there are no special thin capitalization rules within the Slovak tax legislation and 
therefore "normal" transfer pr icing rules, following the ALP,  apply. For the time being, we 
have no practical experience with AC cases. We would consider each case on a case by case 
basis. We would take into acc ount each case of possi ble double taxation at least under the 
Article 25 of pertinent double ta x treaty and consider possibility  to solve the cases under the 
Arbitration Convention on a case by case basis. 
Slovenia:
 
Thin capitalisation is tr eated under the Article 32 «Interest on the surplus of loans» of the 
Corporate Income Tax Act (in force since 1.1.2007) , where it is stipulated  that: Interest on 
loans, excluding cases involving borrowers - ba nks and insurance undertakings, received from 
a shareholder or partner who at any point in the tax period direc tly or indirectly holds no less 
than 25% of shares or holdings in the capital  or voting rights of th e taxable person, provided 
that the loans in question excee d, at any point in the tax period, four times the amount of the 
holding of the shareholder or pa rtner in the taxable person's capital (hereinafter: surplus of 
loans), established with regard to the amount and duration of th e surplus of loans in the tax 
period, shall not be recognized as expenditure, unless the taxa ble person provides evidence 
that he/she could have received the surplus of  the loans from a lender who is a non-affiliated 
person. 
Loans extended by a shareholder or partner subj ect in the above paragr aph involve also loans 
extended by third parties, in cluding loans extended by banks, which are guaranteed by the 
shareholder or partner in quest ion, and/or when the loans are obtained in connection with a 
deposit held in that bank by the sh areholder or partner in question. 
The amount held by a shareholder or partner in th e capital of the recipient of a loan shall be 
determined for the tax period as an average on th e basis of the balance of paid-in capital, net 
profit brought forward, and reserv es as at the last day of each month in the tax period. 
Nevertheless, interest not recognized as an expe nditure is interest on  the loans other than 
those raised by banks and insurance undertakings received by a partner who, at any point in the tax period concerned, directly  or indirectly holds no less than  25% of shares or holdings in 
the capital or voting rights of the taxable perso n, provided that at any po int in the tax period 
concerned those loans exceed: 
In the first year after the date of entry in to force of the Corporate Income Tax Act, a 
 
EN 41   EN factor of eight; 
In the second, third and four th year, a factor of six; 
And in the fifth year, a factor of five times th e amount of this partner's holding in the taxable 
person's capital, esta blished with regard  to the amount and period of  duration of the surplus of 
loans in the tax period concerned. 
We would also like to emphasize that the Corpor ate Income Tax Act and the Transfer pricing 
Provision are following the Transfer pricing Gu idelines of the OECD. The Act stipulates the 
methods on calculating the arm's length price on goods and services, as well as that to take 
into the account when calculating the comparable market price. 
Sweden:  
Swedish comments are inserted in italics below. 
• reduces the rate of interest paid on an inter-company loan 
– If made by the Swedish tax administration: Yes 
– If made by foreign tax administration: Yes 
• reduces the amount of a loan on which intere st is paid because of the limited borrowing 
capacity of the debtor 
– If made by the Swedish tax administratio n: Not applicable as the Swedish tax 
administration cannot make this kind of adjustments. 
– If made by foreign tax admi nistration: Even though we do not find it obvious that 
issues of this kind is covered by the AC, we would accept them. 
• reduces the amount of a loan on which interest is paid because the de bt would not have 
existed for reasons unrelated to borrowing capacity. 
– If made by the Swedish tax administratio n: Not applicable as the Swedish tax 
administration cannot make this kind of adjustments. 
– If made by foreign tax admi nistration: Even though we do not find it obvious that 
issues of this kind is covered by the AC, we would accept them. We do not 
understand why the thin cap question in th e bullet point below is not covered by 
this bullet point.  
• reduces the amount of a loan on which interest is paid because the debt exceeds a thin cap 
ratio 
– If made by the Swedish tax administrat ion: Not applicable as  the Swedish tax 
administration cannot make this kind of adjustments . 
– If made by foreign tax administration: E ven though we do not find it obvious that 
issues of this kind is covered by the AC, we would accept them. In this context we 
would like to state that Sweden does not agree to the principles of the thin cap 
 
EN 42   EN approach. The Swedish opinion is that thin  cap approaches is not in accordance 
with the arm’s length principle. Conse quently, Sweden is unlikely to accept 
adjustments made by a foreign tax adminis tration due to thin cap rules in the 
foreign jurisdiction . 
Sweden wants to clarify that they do not have a ny specific thin cap rules but are able to make 
an adjustment if the conditions are not arm's length. 
United Kingdom:  
The UK approach is to look at the whole amo unt of the relevant payment of interest and 
consider whether that represents  the amount that would have been  paid at arm’s length. We do 
not necessarily divide the amount into its compone nts, such as that re lated to the rate of 
interest or the amount of the debt , but either of those components  taken separately or together 
could be relevant. On that basis, I think it is fair to say that the answer to the first three questions is “Yes”, as recorded in the paper. But I do not think that th e answer to the fourth 
question can be “Yes” because, as we have explained, we would only accept into the Arbitration Convention cases invol ving the application of  the arm’s length principle. In this 
respect, the UK may be close to  Estonia and Finland. The point we were trying to make was 
that we might accept into the Arbitration C onvention a case where an adjustment had been 
made by reference to a ratio, but only to the ex tent of trying to establish what the position 
would have been at arm’s length. So “No” is not  a completely adequate answer to the fourth 
question either. 
 
EN 43   EN ANNEX III:  SCOPE OF THE AC QUESTIONNAIRE  
All MS tax administrations' members were in vited during June 2008 meeting to answer 
whether they consider that the arbitration conv ention can be applied to thin cap issues.  
The answers were the following: 
Member State Preliminary Answer 
Austria YES if based on the applica tion of the arm's length principle 
Belgium In principle YES 
Bulgaria  
Cyprus YES if based on the applica tion of the arm's length principle 
Czech Republic Yes if related to interest rate 
Denmark YES 
Estonia YES 
Finland YES in principle 
France YES if based on the applica tion of the arm's length principle 
Germany YES if based on the applica tion of the arm's length principle 
Greece In principle YES, if based on the app lication of the arm’s length principle, 
but there is no common thin  capitalisation definition 
Hungary NO because they have thin cap rules 
Italy NO 
Ireland In principle YES but Ireland ha s no thin capitalization legislation 
Latvia In principle YES if based on the application of the ar m's length principle 
Lithuania In principle YES 
Luxembourg ? 
Malta YES if based on the applica tion of the arm's length principle 
Netherlands NO 
Poland Yes only if related to interests 
Portugal NO 
Romania  
Slovak Republic Yes if based on the appli cation of the arm´s legth principle  
Slovenia YES in principle but limited to the interests 
Spain YES because based on article 4 of the AC 
Sweden In principle YES but there is no common thin cap definition 
United Kingdom YES 
 
 
EN 44   EN ANNEX IV: QUESTIONNAIRE ON MAP S AND RELATED INTEREST (DOC JTPF  010  BACK 
2008) 
During the 21st JTPF meeting of 21 February 2008 tax administrations' members were invited 
to answer whether under their domestic laws or administrative provis ions they reimburse 
interest incurred on the amount of taxes to be reimbursed to a taxpayer at the end of a MAP 
procedure under the Arbitration Convention. 
Question:  
Does your tax system foresee the reimbursement of  interest incurred on the amount of taxes to 
be reimbursed to a taxpayer at the end of a MA P procedure under the Arbitration Convention? 
To facilitate the debates could you also consider this additional question: 
Could you specify any specific condition to be fulfilled for the reimbursement and whether 
the amount of interest to be reimbursed is limited to the period of time counting from the 
request for a MAP's? 
Member State Preliminary Answer 
Austria YES 
Belgium YES 
Interest for late payment  
 In case of late payment of tax, in princi ple an interest is due for the duration 
of the period of non-payment, calculated at the statutory in terest rate (art. 
414, BITC 92). However, in case of a ppeal against the tax assessment, the 
interest is only due for the first 6 m onths, but will resume at the end of the 
month in which the formal notificatio n of the decision was sent to the 
taxpayer. 
 Moratorium interest
 
 According to article 418, BITC 92, mo ratorium interest at the statutory 
interest rate is paid from the month after which the (undue) tax is paid until 
the notification with which the amount is put at the disposal  of the taxpayer. 
 Application under the Ar bitration convention
 
 
 
EN 45   EN The reimbursement of taxes as a re sult of a decision of the competent 
authorities at the end of the mutual agreement procedure or arbitration procedure give rise to moratorium inte rest as stipulated un article 418, BITC, 
92 (circular AFZ/INTERN IB/98-0170 of July 7
th, 2000) 
Bulgaria NO 
Bulgarian domestic law does not pr ovide for any specific rules for 
reimbursement of taxes to a taxpayer in the case of a MAP being initiated under the Arbitration Convention. No speci al rules are applic able either as 
regards the charging of  interests during a MAP on the reimbursable amount 
of tax. This means that in such cases the general rules provi ded for in the Tax 
and Social Procedure Code (TSPC) concerning reimbursement of taxes 
apply. According to the TSPC the re venue administration shell reimburse 
interests incurred on taxes to be ref unded only if such taxes have been 
collected on the grounds of a tax assessment act issued by the revenue 
administration when such tax assessment  act has been subsequently repealed 
by an administrative body or a court. It  is important to mention that our tax 
legislation envisages suspension of tax collection in specific cases only, i.e. 
when guarantee is established in the na me of the revenue administration.  
 
Taking into consideration the above sa id if taxes are paid by a taxpayer 
on the grounds of his tax return (as a result of a self-a ssessment process) 
no interests are charge able and reimbursable on any amount of tax 
(reported on the tax return) subject  to reimbursement on whatever 
grounds.  
 
It is concluded from the above that the reimbursement of interests in case of 
MAPs as well as the suspension either of tax or interest  collection during 
MAPs could not be possible without modifications of the national rules 
which requires very careful an alyses and political decision  
Cyprus YES 
Czech Republic Generally no. 
The interest is paid for late paymen t. The only case when it is possible to 
refund this interest is if the in terest payment arises due to tax 
administration’s incorrect assessme nt (e.g. when the additional tax 
assessment after tax audit is reduced by remedies or MAP) 
Denmark YES 
Estonia NO 
Similar situation as it is in Bulgaria - if taxes are paid (voluntarily)  by a 
taxpayer on the grounds of his tax return  (as a result of a self-assessment 
 
EN 46   EN process) no interests are chargeable and reimbursable  on any amount of 
tax (reported on the tax return) subj ect to reimbursement on whatever 
grounds. 
Taxation Act in Estonia (§ 116 (1)) provides interest payments for tax 
authorities for the benefit of the taxable person only in case a taxable person 
has paid an amount of tax, an amount of tax has been collected from a taxable person or an amount of tax has been set off against a claim for refund 
submitted by a taxable person on the basis of a notice of assessment or 
liability decision  and the amount of tax exceeds the amount of tax due 
according to an Act concerning a tax 
So, to reimburse the interests incu rred on the amount of taxes to be 
reimbursed to a taxpayer at the end of a MAP procedure under the 
Arbitration Convention, Estonia n eeds to modify its tax system 
Finland In principle yes. There are no any time limitations 
France NO 
But in case of MAP no interest is charged 
Germany YES 
Germany provides for interest payments on supplemental tax claims or tax 
refunds for a time period starting 15 m onths after the end of the calendar 
year in which the tax accrued. 
In a mutual agreement procedure as  to the EU Arbitration Convention 
Germany includes the issue of interest refunds or interest claims on a case by 
case basis into the results of the MAP negotiations. 
The reasons for the inclusion are manifo ld: Questions of reciprocity, i.e. the 
other country does not charge interests on late payments, interest payments are higher than the tax amount due to th e lengths of the negotiations, etc. The 
result of the negotiation is to be included into the tax assessment and the calculation and the assessment of intere sts according to Section 175a of the 
German Fiscal code 
Greece YES 
Hungary YES 
Italy YES 
Ireland NO 
Latvia Yes, 
Latvia’s tax system foresees the reimbursement of interests incurred on the 
amount of taxes to be reimbursed to  a taxpayer at the end of a MAP 
 
EN 47   EN procedure under the Arbitration Convention. 
According to the first paragraph of Ar ticle 28 of Law “On Taxes and Fees”, 
tax payment incorrectly recovered by the tax administration shall be 
refunded to the taxpayer within a period of 15 days from the day when the 
tax administration has ta ken or a court has adopt ed a decision that the 
payment has been recovered in erro r. The refundable amounts shall be 
increased by 0.025 per cent (interest f ee) of the payment amount incorrectly 
recovered for each late day. If the tax administration refunds the amount after 
the 15 days the interest fee shall be  increased till 0.05% for each overdue 
day. 
Therefore if in the result of MAP the decision will be made that tax is 
incorrectly levied in Latvia, Latvia’s  tax administration will reimburse to 
Latvia’s taxpayer incorr ectly recovered tax amount and interest fee for the 
period from day when the tax was collect ed till day when the final decision 
in MAP was made 
Lithuania NO 
Luxembourg NO 
But interests are suspended during the MAP 
Malta YES 
Netherlands YES 
Poland YES 
There are no specific rules concerning MAP procedure; In case of late 
payment of tax, in principle an intere st is due for duration of period of non-
payment. General rules laid down in Polish Tax Ordinance shall apply in 
such case. If at the end of MAP the tax on which interests incurred will be reimbursed also such interest will be reimbursed. 
Reimbursement is possible only on request submitted by taxpayer, in refund 
of overpaid tax, issued in  limited period of time. 
 
Portugal NO 
In accordance with domestic law the taxpayer is entitled to payment of 
compensation interest wherever: (i) there is an incorrect assessment of tax by 
the tax administration; (ii) such incorrect assessment is established by way of an administrative remedy or judicial  proceeding; (iii) such incorrect 
assessment gives rise to payment of tax in excess of that which would be legally due. 
Interest shall be calculated as from the date of the undue tax payment up to 
 
EN 48   EN tax reimbursement in pursuance to the repealed act  
 No special rules are foreseen for the reimbursement of interests incurred on 
the amount of taxes to be reimbursed to a taxpayer at the end of a MAP 
under the Arbitration Convention 
Romania  
There are no specific rules on pe nalty’s under MAP provisions.  
Under the Tax Procedure Code for late payment, the tax payer has to pay 
penalty’s. Penalty’s are computed until the debt is switch off (by payment, 
compensation, enforcement). Penalty has to  refer to an existing debt, if the 
debt is diminish by a court decision, by example, the penalty’s are diminish 
also according to the remaining value of the debt. This fact is according with 
the principle “the secondary is following the principal” and in this case the debt is “the principal” and th e penalty’s is “the secondary” 
Slovak Republic Yes 
There are no specific administrative ru les concerning MAP and the interest 
in the Slovak Republic. However, accordi ng to the general rules laid down in 
the Tax Administration Act No. 511/1992 Co ll., if the amount of the tax was 
decreased (or reimbursed) by a legitim ate decision, the tax administration 
would ex officio decrease (or reimbur se) penalty or default interest 
proportionally 
Slovenia YES 
Q1: Yes, in general the Slovene tax sy stem foresees the reimbursement of 
interests although it should be pointed  out that Sloveni a does not have 
experience in MAP procedure 
Q2: If a case under the MAP procedure would occur, the taxpayer would be, 
under the current Tax Procedure Act, entitled to the reimbursement of 
interests from the point onward when the overpayment of tax has occurred. 
 
Spain  
There are no specific rules for MAPs a nd the reimbursement is not automatic 
Sweden YES 
Sweden do not apply any time limitation 
United Kingdom YES in all cases 
 
 
EN 49   EN ANNEX V: NUMBER OF PENDING CASES UNDER THE AC AT THE END OF 2007  (DOC JTPF  
016/R EV2/BACK/2008) 
1. Total amount of pending MAPs under the EU  Arbitration Convention in relation to 
Member States as of 31/12/2007 
 DK DE5 EL ES FR IE IT LU NL6 AT PT FI SE UK 
BE 0 
0 9 
7 0 
0 1 
0 5 
5 0 
0 2 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 2 
1 
 DK 2 
2 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
1 0 
0 2 
2 0 
0 
  DE 0 
0 4 
4 18 
18 0 
0 10 
10 0 
0 11 
11 3 
3 3 
3 0 
0 1 
1 16 
13 
   EL 0 
0 0 
0 0 
0 1 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES 14 
14 1 
1 3 
3 0 
1 2 
2 0 
0 3 
1 0 
0 0 
0 6 
6 
     FR 7 
7 4 
4 0 
2 8 
7 1 
1 4 
5 0 
 0 
0 18 
21 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
1 
       IT 0 
0 1 
1 0 
0 0 
1 0 
0 0 
1 3 
3 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 1 
1 0 2 
2 10 
9 
                                                 
5 Hungary has one case with Germany (2007) 
6 NL has one case with PL (where Poland does not have a case) and one case with HU (both in 2007) 
 
EN 50   EN           AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 1 
2 
            FI 1 
2 0 
0 
             SE 0 
0 
Number of cases: 7168-193  
                                                 
7 Discrepancies in the number of pending cases reported by Member States may result from cases considered closed 
on 31/12/2007 by one Member State but not yet form ally closed by the other Contracting State  
 
EN 51   EN 2. Pending MAPs under the EU Arbitration Conv ention in relation to Member States as 
of 31/12/2007, for which the request was presented before 2000. 
 DK DE EL ES FR IE IT LU NL AT PT FI SE UK 
BE 0 
0 1 
1 0 
0 0 
0 1 
1 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
 DK 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
  DE 0 
0 0 
0 0 
0 0 
0 0 
 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
   EL 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES 0 
 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0  
0 
     FR 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
       IT 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 0 
0 0 
0 0 
0 0 
0 
          AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 0 
0 
 
EN 52   EN             FI 0 
0 0 
0 
             SE 0 
0 
Number of cases: 2 8 
                                                 
8 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 53   EN 3. Pending MAPs under the EU Arbitration Conv ention in relation to Member States as 
of 31/12/2007, for which the request was presented in 2000. 
 DK DE EL ES FR IE IT LU NL AT PT FI SE UK 
BE 0 
0 1 
0 0 
0 0 
0 0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
 DK 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
  DE 0 
0 0 
0 0 
0 0 0 
 0 
0 0 
0 0 
  
0 0 
0 0 
0 0 
   EL 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES  
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
1 
     FR 0 
0 0 
0 0 
0 1 
0 0 
0 0 
1 0 
0 0 
0 0 
1 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
       IT 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 0 
0 0 
0 0 
0 0 
0 
          AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 0 
0 
 
EN 54   EN             FI 0 
0 0 
0 
             SE 0 
0 
Number of cases: 1-59 
                                                 
9 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 55   EN 4. Pending MAPs under the EU Arbitration Conv ention in relation to Member States as 
of 31/12/2007, for which the request was presented in 2001. 
 DK DE EL ES FR IE IT LU NL AT PT FI SE UK 
BE 0 
0 1 
0 0 
0 0 
0  
0 0 
0 1 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
 DK 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
  DE 0 
0 0 
0 0 
0 0 0 
 0 
0 1 
1 0 
 1 
0 0 
0 0 
0 0 
   EL 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES  
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0  
0 
     FR 0 
0 0 
0 0 
0 0 
0 0 
0 1 
0 0 
0 0 
0 0 
 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
       IT 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 0 
0 0 
0 0 
0 0 
0 
          AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 0 
0 
 
EN 56   EN             FI 0 
0 0 
0 
             SE 0 
0 
Number of cases: 1-5 10 
                                                 
10 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 57   EN 5. Pending MAPs under the EU Arbitration Conv ention in relation to Member States as 
of 31/12/2007, for which the request was presented in 2002. 
 DK DE EL ES FR IE IT LU NL AT PT FI SE UK 
BE 0 
0 0 0 
0 0 
0 0 
10 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
 DK 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
  DE 0 
0 0 
0  
0 0 1 
1 0 
0  
0 0 
0  
0 0 
0 0 
0 0 
   EL 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES 1 
1 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
     FR 0 
0  
 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
2 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
       IT 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 0 
0 0 
0 0 
0 1 
1 
          AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 0 
0 
 
EN 58   EN             FI 0 
0 0 
0 
             SE 0 
0 
Number of cases: 4-6 11 
                                                 
11 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 59   EN 6. Pending MAPs under the EU Arbitration Conv ention in relation to Member States as 
of 31/12/2007, for which the request was presented in 2003. 
 DK DE EL ES FR IE IT LU NL AT PT FI SE UK 
BE 0 
0 0 0 
0 0 
0 0 
1 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
 DK 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
  DE 0 
0 0 
0 0 
 0 0 
0 0 
0 0 
0 0 
0 0 
1 0 
0 0 
0 0 
 
   EL 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES 1 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
0 
     FR 0 
0 1 
1 0 
0 0 
 0 
0 1 
 0 
0 0 
0 0 
 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
       IT 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 0 
0 0 
0 1 
1 0 
1 
          AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 0 
0 
 
EN 60   EN             FI 0 
0 0 
0 
             SE 0 
0 
Number of cases: 3-812 
                                                 
12 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 61   EN 7. Pending MAPs under the EU Arbitration Conv ention in relation to Member States as 
of 31/12/2007, for which the request was presented in 2004. 
 DK DE EL ES FR IE IT LU NL AT PT FI SE UK 
BE 0 
0 1 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
 DK 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0  
0 0 
0 
  DE 0 
0 0 
0 3 
1 0 0 
 0 
0 3 
3 0 
  
0 0 
0  
0 1 
 
   EL 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES 1 
1 0 
0 0 
0 0 
0 0 
0 0 
0  
0 0 
0 0 
0 1 
0 
     FR 0 
0 0 
0 0 
0 0 
 0 
0 0 
0 0 
0 0 
0 0 
1 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
       IT 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 0 
0 0 
0  
0 0 
0 
          AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 0 
0 
 
EN 62   EN             FI 0 
0 0 
0 
             SE 0 
0 
Number of cases: 6-1113 
                                                 
13 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 63   EN 8. Pending MAPs under the EU Arbitration Conv ention in relation to Member States as 
of 31/12/2007, for which the request was presented in 2005. 
 DK DE EL ES FR IE IT LU NL AT PT FI SE UK 
BE 0 
0 4 
4 0 
0 0 
0 3 
0 0 
0 1 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
 DK 1 
1 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
  DE 0 
0 2 
2 4 
5 0 
0 3 
3 0 
0 1 
1 1 
1 1 
1 0 
0 0 
0 3 
3 
   EL 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES 2 
3 0 
0 0 
0 0 
0 0 
0 0 
0 0 
1 0 
0 0 
0 0 
2 
     FR 1 
1 0 
0 0 
0 0 
0 0 
1 1 
 0 
0 0 
0 5 
6 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
       IT 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
0 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 1 
0 0 
0 0 
0 0 
 
          AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 0 
0 
 
EN 64   EN             FI 0 
0 0 
0 
             SE 0 
0 
Number of cases: 29-4214 
                                                 
14 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 65   EN 9. Pending MAPs under the EU Arbitration Conv ention in relation to Member States as 
of 31/12/2007, for which the request was presented in 2006 
 DK DE EL ES FR IE IT LU NL AT PT FI SE UK 
BE 0 
0 1 
1 0 
0 0 
0 1 
1 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 2 
1 
 DK 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
1 0 
0 
  DE 0 
0 1 
1 5 
7 0 0 
 0 
0 2 
2 1 
1  
0 0 
0 0 
0 3 
3 
   EL 0 
0 0 
0 0 
0 1 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES 4 
3 0 
0 1 
1 0 
0 1 
1 0 
0 2 
0 0 
0 0 
0 1 
1 
     FR 4 
4 2 
2 0 
1 2 
3 1 
1 0 
1 1 
1 0 
0 7 
6 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
 
       IT 0 
0 1 
1 0 
0 0 
1 0 
0 0 
1 1 
3 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 0 
1 0 
0 1 
0 5 
3 
          AT 0 
0 0 
0 0 
0 0 
0 
           PT 0 
0 0 
0 1 
2 
 
EN 66   EN             FI 1 
2 0 
0 
             SE 0 
0 
Number of cases: 45-6615 
                                                 
15 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 67   EN 10. Pending MAPs under the EU Arbitration Co nvention in relation to Member States 
as of 31/12/2007, for which the request was presented in 2007 
 DK DE16 EL ES FR IE IT LU NL17AT PT FI SE UK 
BE 0 
0 1 
1 0 
0 1 
0  
1 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
 
 DK 1 
1 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
1 0 
0 1 
1 9 
0 
  DE 0 
0 1 
1 3 
5 0 6 
6 0 
0 4 
4 1 
1 1 
1 0 
0 1 
1 0 
7 
   EL 0 
0 0 
0 0 
0  
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
    ES 5 
6 1 
1 2 
2 0 
1 1 
1 0 
0 1 
0 0 
0 0 
0 2 
2 
     FR 2 
2 1 
1 0 
1 5 
4 0 
0 1 
2 1 
1 0 
0 5 
5 
      IE 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 1 
1 
       IT 0 
0 0 
0 0 
0 0 
 0 
0 0 
 1 
 
        LU 0 
0 0 
0 0 
0 0 
0 0 
0 0 
0 
         NL 0 
0 0 
0 0 
0  
1 4 
4 
          AT 0 
0 0 
0 0 
0 0 
0 
                                                 
16 Hungary has one case with Germany (2007) 
17 NL has one case with PL and one case with HU (both in 2007) 
 
EN 68   EN            PT 0 
0 0 
0 0 
 
            FI 1 
2 0 
0 
             SE 0 
0 
Number of cases: 55-8118 
                                                 
18 Discrepancies in the number of pending cases re ported by Member States may result from cases 
considered closed on 31/12/2007 by one Member State but not yet formally closed by the other 
Contracting State 
 
EN 69   EN 11. Total amount of pending MAPs under the EU  Arbitration Convention as of 31/12/2007 in  relation to the year when the request was received by 
the tax administration19 
 Requests 
received prior 
to 2000 Requests 
received in 
2000 Requests 
received in 
2001 Requests 
received in 
2002 Requests 
received in 
2003 Requests 
received in 
2004 Requests 
received in 
2005 Requests 
received in 
2006 Requests 
received in 
2007 Total pending 
cases 
2007 2 1 - 5 1 - 5 4 - 6 3 - 8 6 - 11 29 - 42 45 - 66 55 - 81 146 - 226 
2006 2 - 5 3 - 6 0 - 4 4 - 9 10 - 16 8 - 20 39 - 55 46 - 69  112 - 184 
2005 16 - 24 1 - 13 5 - 10 10 - 18 12 - 23 12 - 25 42 - 68   98 - 181 
2004 24 8 12 24 23 16 0   107 
 
                                                 
19 Discrepancies in the number of pending cases reported by Member  States may result from cases considered closed on 31/12/2007 b y one Member State but not yet formally closed 
by the other Contracting State 
 
EN 70   EN ANNEX VI: LIST  OF INDEPENDENT  PERSONS  OF STANDING  (DOC JTPF  
010/BACK/REV11/2005) 
Arbitration Convention - Article 9 (4) 
List of independent persons of standing as of 01/06/2008 20 
Member State Name Date of 
Nomination
 Eligible as 
Chairman21 CV  
available 
AUSTRIA Mr. Karl BRUCKNER  08.2000 NO EN CV 
 Mr. Siegfried DAPOZ 08.2000 NO EN CV 
 Mrs Veronika BERECZ 12.2007 NO EN CV 
 Mr. Wolfgang MALZER 12.2007 NO EN CV 
 Mr. Robert OTTEL 12.2007 NO EN CV 
BELGIUM Mr. Jacques AUTENNE 1995 YES EN CV 
 Mr. L.A. DENYS 1995 YES EN CV 
 Mr. Jacques GHYSBRECHT 1995 NO  
 Mr. Luc HINNEKENS 1995 YES EN CV 
 Mr. Jacques MALHERBE 1995 YES EN CV 
BULGARIA Mr Bisser Slavkov 04.2008 NO EN CV 
 Mr Alexander Penov 04.2008 YES EN CV 
 Mrs Dimitrinka Spiridonova 04.2008 NO EN CV 
 Mrs Evelina Dimitrova 04.2008 YES EN CV 
     
CYPRUS     
CZECH REPUBLIC Mr. Frantisek FRANCIREK 01.2007 NO EN CV 
 Mr Tomas KROLUPPER 01.2007 NO EN CV 
 Mr. Jiri NEKOVAR 01.2007 NO EN CV 
 Mr. Marek ROMANCOV 01.2007 NO EN CV 
 Mr. Richard SVEJDA 01.2007 NO EN CV 
DENMARK Mrs. Lene Pagter KRISTENSEN 1.2006 YES EN CV 
 Mr. Aage MICHELSEN 11.1993 YES EN CV 
 Mr. Jan PEDERSEN 11.1993 YES EN CV 
 Mr. Soren Lehman NIELSEN 1.2006 YES EN CV 
 Mr. John BYGHOLM 1.2006 NO EN CV 
ESTONIA     
FINLAND Mr. Raimo IMMONEN 12.2004 NO EN CV 
 Mr. Seppo PENTTIL Ä 12.2004 NO  
 Mrs. Marjaana HELMINEN 06.2006 NO EN CV 
 Mr. Ahti VAPAAVUORI 12.2004 NO EN CV 
 Mrs. Hannele RANTA-LASSILA 12.2004 NO EN CV 
FRANCE Mr. Dominique LATOURNERIE 12.2001 YES  
 Mr. Jean GROUX 02.1996 YES  
                                                 
20 On the basis of the information available to the Commission Services 
21 On the basis of point 4.1 (c) of the Code of Conduct for the effective implementation of the AC 
(COM2004/297final) 
 
EN 71   EN  Mr. Guy GEST 02.1996 YES  
 Mr. Philippe THIRIA 12.2001 YES  
 Mr. Robert BACONNIER 02.1996 YES  
GERMANY Mr. Thomas BORSTELL 09.2005 NO DE/EN CV 
 Mrs. Jutta FÖRSTER 09.2005 YES DE/EN CV 
 Mr. Jörg-Dietrich KRAMER 09.2005 YES DE/EN CV 
 Mr. Andreas OESTREICHER 09.2005 NO DE/EN CV 
 Mr. Matthias WERRA 09.2005 NO DE CV 
GREECE Mrs Paschalis CONSTANTINOS 10.2005 YES EN CV 
 Mr. Panagiotis DAMILAKOS 10.2005 NO EN CV 
 Mrs. Katerina SAVVAIDOU 10.2005 NO EN CV 
 Mr. Antonis ATHANASOPOULOS 10.2005 NO EN CV 
 Mr. Fotios NICOLAIDIS 10.2005 NO EN CV 
HUNGARY     
IRELAND Ms Marie Barr 01.2004 NO EN CV 
 Mr Paul McGowan 01.2004 NO EN CV 
 Mr Fergal O’Rourke 01.2004 NO EN CV 
 Mr Dermot Quigley 01.2004 NO EN CV 
 Mr Jim TIERNEY 01.2004 NO EN CV 
ITALY Mr. Pietro ADONNINO 02.1994 YES EN/IT CV 
 Mr. Franco CALEFFI 02.1994 YES EN/IT CV 
 Ms. Silvia CIPOLLINA 10.2005 YES EN/IT CV 
 Mr. Enrico NUZZO 02.1994 YES EN/IT CV 
 Mr. Andrea SIMONI 02.1994 YES EN/IT CV 
LATVIA     
LITHUANIA     
LUXEMBOURG Mr. Arno SCHLEICH 04.2001 YES  
 Mr. Martin SCHROEDER 04.2001 YES  
 Mr. Corneille BRUCK 09.1994 YES  
 Mr. André ELVINGER 09.1994 YES  
 Mr. Pierre PESCATORE 09.1994 YES  
MALTA Ms Juanita Bezzina 06.2008 YES EN CV 
 Mr Neville Gatt 06.2008 YES EN CV 
 Mr Conrad Cassar Torreggiani 06.2008 YES EN CV 
 Mr Antoine Fiott 06.2008 YES EN CV 
 Mr Stephen Attard 06.2008 YES EN CV 
NETHERLANDS Mrs. I.J.J. BURGERS 03.1996 YES EN CV 
 Mr. J.A.C.A. OVERGAAUW 05.2007 YES EN CV 
 Mr. H.MA.L. HAMAEKERS 05.2007 YES EN CV 
 Mrs. C. SILBERZTEIN 05.2007 YES EN CV 
 Mrs. F. GISKES 05.2007 NO EN CV 
POLAND Mr. Bogumi ł Brzeziński 04.2008 YES EN CV 
 Mr. Jan G łuchowski 04.2008 YES EN CV 
 Mrs.Renata Hayder 04.2008 NO EN CV 
 Mrs. Hanna Litwi ńczuk 04.2008 YES EN CV 
 Mr. Włodzimierz Nykiel 04.2008 YES EN CV 
PORTUGAL Mr. Rogério FERNANDES 
FERREIRA 11.2005 YES  
 
EN 72   EN  Mr. José Guilherme XAVIER DE 
BASTO 11.2005 YES  
 Mr. José Luís SALDANHA 
SANCHES 11.2005 YES  
 Mr. António MARTINS 11.2005 NO  
 Mr. José VIEIRA DOS REIS 11.2005 NO  
ROMANIA     
SLOVAKIA Mr. Vaclav DUFALA 03.2007 YES EN CV 
 Mrs. Gizela LENARTOVA 03.2007 YES EN CV 
 Mr. Artur OBERHAUSER 03.2007 YES EN CV 
 Ms. Christiana SERUGOVA 03.2007 NO EN CV 
 Mr. Marian TOTH 03.2007 NO EN CV 
SLOVENIA     
SPAIN Mr. José Manuel CALDERON 
CARRERO 10.2005 YES EN/SP CV 
 Mr. Miguel CRUZ AMOROS 10.2005 YES EN/SP CV 
 Mr. Abelardo DELGADO PACHECO 10.2005 YES EN/SP CV 
 Mr. Luis LOPEZ-TELLO Y DIAZ 
AGUADO 10.2005 YES EN/SP CV 
 Mr. Fernando VELAYOS JIMENEZ 10.2005 YES EN/SP CV 
SWEDEN Mrs. Kerstin BOSTRÖM 01.2006 YES  
 Mr. Stefan ERSSON 01.2006 YES  
 Mr. Carl Gustav FERNLUND 01.2006 YES EN CV 
 Mr. Sven-Olof LODIN 01.2006 YES EN CV 
 Mrs Ingrid MELBI 01.2006 YES EN CV 
UNITED 
KINGDOM Mrs. Nuala BRICE 02.2002 YES  
 Mr. James David DEMACK 02.2002 YES EN CV 
 Mr. Malcolm GAMMIE QC 02.2002 YES EN CV 
 Mr. Avery JONES CBE 02.2002 YES EN CV 
 Mr. Gordon REID QC 02.2002 YES EN CV 
 
 
EN 73   EN ANNEX VII:  INDEPENDENT  PERSON  OF STANDING`S  DECLARATION  OF 
ACCEPTANCE  AND  STATEMENT  OF INDEPENDENCE 
INDEPENDENT PERSON OF STANDING`S DECLARATION OF ACCEPTANCE AND 
STATEMENT OF INDEPENDENCE 
(Please mark the relevant box or boxes) 
I, the undersigned, Name: ________________________ First Name: ____________________ 
Preamble: 
Before appointment or confirmation, a  prospective independent person of 
standing shall sign a stat ement of independence and di sclose in writing to the 
Secretariat22 any facts or circumstances which might be of such a  nature as to 
call into question the independent person of standing's independence in the eyes 
of the parties. The Secretariat shall prov ide such information to the Competent 
Authorities in writing and fix a time li mit for any comments from them. An 
independent person of standing shall im mediately disclose in writing to the 
Secretariat and to the Comp etent authorities any facts or circumstances of a 
similar nature which may ar ise during the arbitration.  
ACCEPTANCE  
 hereby declare that I accept to serve as i ndependent person of sta nding in an advisory 
commission ruled by the principles established in the Convention on th e elimination of double 
taxation in connection with the adjustment of profits of associated enterprises as well as in the Code of Conduct related to it, in the present case. In so d eclaring, I confirm that I have 
familiarized myself with the requirements of th e provisions of the Convention and I am able 
and available to serve as an arbitrator in acco rdance with all of the requirements of those 
provisions, 
INDEPENDENCE  
(If you accept to  serve as an independent pers on of standing, please also  check one of the two 
following boxes. The choice of whic h box to check will be determined after you have taken into 
account, inter alia,  whether there exists any past or present relationship, direct or indirect, 
with any of the parties (i.e. tax administr ations and the companies or Multinational 
Enterprises or their counsel), whether financia l, professional or of another kind and whether 
the nature of any such relationship is such that disclosure is called for pursuant to the criteria 
set out below. Any doubt should be resolved in favor of disclosure.)  
 I am independent of each of the parties (i.e. tax administrations and the companies or 
Multinational Enterprises or their counsel) and intend to remain so; to the best of my 
                                                 
22 The Secretariat is the one set-up according to pr ovision 4.2 C of the Code  of Conduct on the AC 
 
EN 74   EN knowledge, there are no facts or circ umstances, past or present, that need be disclosed because 
they might be of such nature as to call into que stion my independence in the eyes of any of the 
parties 
OR  I am independent of each of the  parties (i.e. tax administrations and the companies or 
Multinational Enterprises or their counsel) and intend to remain so; however, I wish to call 
your attention to the following facts or circumst ances which I hereafter disclose because they 
might be of such a nature as to call into ques tion my independence in the eyes of any of the 
parties. (Use separate  sheet if necessary.) 
NON ACCEPTANCE  
 hereby declare that I decline to serve as an independent person of standing in the subject 
case. (If you wish to state the reasons for checking this box, please do so.) 
ANNEX VIII:  QUESTIONNAIRE ON THE INTER -ACTION BETWEEN JUDICIAL APPEALS AND THE 
AC 
In order to assess the situati on prevailing in each Member State it was agreed by the members 
of the JTPF to clarify how their tax administra tion applies Article 7 (3) in practice. It was 
considered that this situation can lead to l ong delays in the applica tion of the Arbitration 
Convention and the elimin ation of double taxation. 
Question 1:  
Considering Art. 7(3) "Where the domestic law of a C ontracting State does not permit the 
competent authorities of that State to derogat e from the decisions of their judicial bodies, 
paragraph 1 shall not apply unless th e associated enterprise of t hat State has allowed the time 
provided for appeal to expire, or has withdrawn any such appeal before  a decision has been 
delivered." , can your Member State/Tax administration derogate from the decisions of their 
judicial bodies? 
Question 2:  
Those MS who can derogate, what do they consid er to be a judicial body and when is the 
decision considered as final? 
Question 3:  
3.1 Those MS who can derogate, do they  actually derogate in practice? 
3.2 If the case has so far never arisen, would t hose countries who can derogate be willing to 
derogate in practice? 
Question 4:  
MS who cannot derogate, do they  stop in practice al l negotiations with the other MS or do 
they continue and inform the taxpayer once they have reached an agreement so that he has the 
choice to see the agreement implemented or to continue with hi s judicial appeals? 
 
EN 75   EN Question 5:  
In general it may be useful to learn about a ny experience with the application of art 7(3). 
Where it is not yet covered by your answers to the previous questions could you describe your 
national experiences? 
 
EN 76   EN Answers to question 1:  
Considering Art. 7(3) "Where the domestic law of a C ontracting State does not permit the 
competent authorities of that State to derogat e from the decisions of their judicial bodies, 
paragraph 1 shall not apply unless th e associated enterprise of t hat State has allowed the time 
provided for appeal to expire, or has withdrawn any such appeal before  a decision has been 
delivered." , can your Member State/Tax administration derogate from the decisions of their 
judicial bodies? 
Member State Question 1 
Austria No 
In Austria it is not possible to der ogate from decisions of the Supreme 
Adminstrative Court (Verwaltungsgerich tshof) or from decisions of the 
Supreme Constitutional Court (Verfassungsgerichtshof). 
Belgium NO 
Bulgaria No 
Cyprus No 
Czech Republic No 
Generally any decision of the Tax admini stration must be in accordance with 
the decision of the Court 
Denmark No 
Estonia No 
Finland In principal , yes. 
If the result of an MAP –procedure is to reduce the taxes payable in Finland, 
the domestic decision is made on the basis of Sec 89 of the Act on Taxation Procedure, which in turn refers to a consideration of expediency. Therefore 
the final result may deviate from an eventual court decision in the case. 
Please note however, that Finland does not  generally enter into MAPs if the 
taxpayer has commenced appeals proce dures; a MAP may be launched when 
the final decision is reached (see below) 
France Selon le paragraphe 3 de l'article 7 de la convention eur opéenne d'arbitrage, 
dans les cas où la législation interne d' un Etat contractant ne permet pas aux 
autorités compétentes de déroger aux déci sions de leurs instances judiciaires, 
la procédure d'arbitrage n'es t possible que si l'entrepri se a laissé s'écouler le 
délai de présentation du recours auprès  des juridictions nationales ou s'est 
désistée de ce recours avant qu'une déci sion ait été rendue. Par décision des 
instances judiciaires, il faut entendre  une décision juridictionnelle, résultant 
en France du juge administratif qui est seul compétent en matière d'impôts directs visés par la conventi on européenne d'arbitrage. 
 Dans sa déclaration unilatérale faite le jour de la signature de cette 
convention, la France a indiqué qu'elle fe rait application de cette disposition. 
En effet, le principe de l'autorité de la chose jugée ne permettrait pas aux autorités compétentes de se conformer à l'avis d'une commission consultative constituée si elles devaient, ce faisan t, remettre en cause une décision de 
justice passée en force de chose jug ée. Par conséquent, les contribuables 
concernés devront donc faire le choi x soit de poursuivre une procédure 
juridictionnelle jusqu'à son terme, soit d'y renoncer afin que la phase d'arbitrage de la convention puisse être conduite  
 
EN 77   EN Ainsi, en application de ces principes,  en cas de recours contentieux exercé 
par l'entreprise, le délai de deux ans pré vu au paragraphe 1 de l'article 7 de la 
convention d'arbitrage au terme duque l la commission cons ultative doit être 
constituée, à défaut d'avoir trouvé un acco rd dans le cadre de la procédure 
amiable, commencera à courir à partir du moment où l'entreprise se sera désistée de son recours  Ce report du point de départ du délai de deux ans s'applique dès lors qu'un recours de droit inteme est exercé c ontre une décision que ce soit devant 
l'administration ou devant un tribunal. En effet, selon le droit interne 
français, les contestations élevées par les contribuables sont d'abord 
obligatoirement soumises par voie de  réclamation à l'administration des 
impôts et le contribuable peut ensuite porter le litige devant la juridiction 
compétente  
 
Germany The German revenue administration may, on the basis of Section 175a of the 
Abgabenordnung  (Fiscal Code), derogate from the decisions of the German 
fiscal courts where the implementati on of a mutual agreement understanding 
is concerned 
Greece The Hellenic Tax Authorities can not derogate  from the decisions of 
judicial bodies, due to constitutional r easons. The judicial bodies responsible 
for tax disputes are the Administrative Courts: Administrativ e Court of first 
Instance, Administrative Court of  Appeal, and Council of State 
Hungary No, 
Due to constitutional and administrative reasons 
Italy No 
Ireland No 
Latvia No 
Latvia’s State Revenue Service can not derogate from the decision of judicial 
bodies. The judicial body in this cont ext is Administrati ve Court (three 
instances: District Administrative C ourt, Regional Administrative Court, 
Administrative Department  of Senate of Supreme Court). According to the 
6th paragraph of Article 37 of Law on Ta xies and Fees a taxpayer can appeal 
the State Revenue Services General Directors decision to a Court. 
Administrative Department of Senate of  Supreme Court is the last instance 
which hears administrative cases in ca ssation procedure. In accordance with 
Article 351 of Administra tive Procedure Law this judgment is final and can 
not be appealed 
Lithuania NO 
Luxembourg  
Malta No 
Malta cannot derogate 
Netherlands Yes 
Poland No 
According Polish rules, the tax administration can not derogate from decision of Polish judicial bodies concerning administrative decision based on given 
state of affairs. It means, that due to Polish provisions regulating procedure 
before administrative courts, the le gally valid judicial decision (final 
decision) is obliging to the tax admi nistration involved in individual case. 
 
EN 78   EN Judicial decision is final when  the appeal is not allowed 
Portugal No 
Considering that the Constitution of the Portuguese Republic establishes that 
any court decision will be bounding and mandatory for all public and private 
entities and has prevalence over decisions  from any other authority, Portugal 
made a statement to clarify that the provi sions of Art. 7(3) of the AC shall be 
applied. The juridical effects from a judicial decision can’t, th erefore, be modified by 
a decision from the Tax Administration or by a solution reached within the 
scope of a mutual agreement procedure 
Romania No 
Tax administration cannot derogate from a court decision 
Slovak Republic No. 
 Slovak Tax Administration can not de rogate from the Court decisions.
 
 
Slovenia No. 
In case of Slovenia the Slovene Tax administration can not derogate the 
decisions taken by judicial bodies 
Spain Spanish Constitution does not allo w tax administration to act against a 
judicial decision 
Sweden Yes, 
the Swedish Competent Authority can de rogate from the decisions of the 
judicial bodies if this follows fr om a provision in a Double Taxation 
Agreement or another agreement to eliminate double taxation such as the Arbitration Convention (Chapter 7 Pa ragraph 4 of the Tax Assessment Act 
(1990:324) 
United Kingdom Yes. UK law (S815B Taxes Act 1988) enables the UK tax administration to 
give effect to outcomes reached under the Convention 
Answers to question 2  
Those MS who can derogate, what do they consid er to be a judicial body and when is the 
decision considered as final? 
Member State Question 2 
Austria NA 
Belgium NA 
Bulgaria NA 
Cyprus NA 
Czech Republic NA 
Denmark NA 
Estonia NA 
Finland The assessment adjustment board is the first instance of appeal in every tax 
district and, thus, can be consider ed as judicial body. The Administrative 
Courts are also considered as judici al bodies. Administ rative Courts deal 
with appeals against decisions made by the authorities and administrative 
disputes. The decision is considered as final when it has reached a legal 
validity, i.e. when the appeal period ha s expired, the Supreme Administrative 
Court has given its decision or the right to appeal has been denied 
 
EN 79   EN France NA 
Germany A decision is considered fina l where a judgement has the force of res 
judicata  and, in particular, a tax assessment notice becomes legally 
enforceable. The tax assessment notice itse lf constitutes the decisive point of 
reference for the ability to derogate – a legally enforceable tax assessment 
notice has no detrimental effect. This applies irrespective of whether the tax assessment notice was the subject of c ourt proceedings or not. The binding 
effect of the tax assessment notice itself is, in fact, always the central issue. 
In this context, the “judicial body”, from the German perspective, means the fiscal courts as the judicial power for the disputes cited in  Section 33 (1) of 
the Finanzgerichtsordnung  (Code of Procedure for Fiscal Courts), especially 
public-law disputes regardi ng fiscal matters, insofar as the taxes are subject 
to the Federation’s legislative powers a nd are administered by the Federation 
or Länder  (federal state) revenue authoritie s. Fiscal jurisdiction is exercised 
by special, independent administrative c ourts that are separate from the 
administrative authorities. At the Länder  level, fiscal jurisdiction is exercised 
by the fiscal courts as the highest Länder  courts. In the case of the 
Federation, the Bundesfinanzhof (Federal Fiscal Court) has fiscal jurisdiction 
. 
Greece NA 
Hungary NA 
Italy NA 
Ireland NA 
Latvia NA 
Lithuania NA 
Luxembourg  
Malta NA 
Netherlands The Netherlands cons ider a court or a tribunal to  be a judicial body (i.e. in 
The Netherlands: Rechtbank, Gerechts hof, Hoge Raad). A decision is 
considered to be final if all ri ghts to appeal are no longer open 
Poland NA 
Portugal NA 
Romania NA 
Slovak Republic NA 
Slovenia NA 
Spain NA 
Sweden Sweden considers the following as a judicial body: 
 1. Tax administration 2. County administrative courts 3. Administrative courts of appeal 4. The Supreme administrative court  The decision is considered as final when the time for appeal has elapsed.  A decision made by the Tax admini stration can be reassessed. Such a 
reassessment can be applied for by the taxpayer before the expiration of the 
fifth calendar year after the assessment year.  A reassessment made by the Tax administration can be appealed against to 
 
EN 80   EN the County administrative court by the taxpayer before the expiration of the 
fifth calendar year after the assessment year.  A decision made by the County administra tive court can be appealed against 
to the Administrative court of appeal by the latest at two months after the day 
the decision of the County admi nistrative court was announced. 
 A decision made by the Administrative court of appeal can be appealed 
against to the Supreme administrativ e court, but the decision will be 
reconsidered by the Supreme administ rative court only if the Supreme 
administrative court grants a leave to a ppeal. The decision is considered final 
on the day the Supreme administra tive court announces its decision. 
 
United Kingdom The General Co mmissioners, Special Commi ssioners or UK Court (High 
Court, Court of Appeal, House of Lords) are judicial bodies 
Answers to question 3.1 and 3.2  
3.1 Those MS who can derogate, do they  actually derogate in practice?  
3.2 If the case has so far never arisen, would t hose countries who can derogate be willing to 
derogate in practice? 
Member State Question 3.1 Question 
3.2 
Austria NA  
Belgium NA NA 
Bulgaria NA NAN 
Cyprus NA NA 
Czech Republic NA NA 
Denmark NA NA 
Estonia NA NA 
Finland No cases Yes if 
necessary 
France Sans objet compte tenu de la réponse à la question 1   
Germany Where necessary, yes. This is the case where the tax assessment 
notice is actually already binding.  Wenn es erforderlich ist, ja. Dies ist der Fall, wenn der Steuerbescheid tatsächlich bereits bestandskräftig ist Not 
applicable 
nicht 
angezeigt  
Greece NA NA 
Hungary NA NA 
Italy NA NA 
Ireland NA NA 
Latvia NA NA 
Lithuania NA NA 
Luxembourg   
Malta NA NA 
Netherlands Yes - 
Poland NA  
Portugal NA  
 
EN 81   EN Romania NA NA 
Slovak Republic NA NA 
Slovenia NA  
Spain NA NA 
Sweden Yes. 
There have been such cases in  Sweden, though not yet under the 
Arbitration convention  
 yes 
United Kingdom It has not been necessary to do this in a particular case Derogation 
is a 
possibility 
that would 
be 
considered 
to allow the 
UK to 
uphold its 
obligations 
under the 
Arbitration 
Convention
. Any 
possible 
derogation 
would be 
viewed in 
this context  
Answers to question 4  
MS who cannot derogate, do they  stop in practice al l negotiations with the other MS or do 
they continue and inform the taxpayer once they have reached an agreement so that he has the 
choice to see the agreement implemented or to continue with hi s judicial appeals? 
Member State Question 4 
Austria We are prepared to continue our  MAP negotiations irrespective whether an 
appeal is pending or not. Only for the set up of the advisory commission, we 
would regard a pending appeal as in conflict. 
Belgium Enterprises can introduce an (adm inistrative) appeal – which may be 
followed by a judicial procedure as provi ded for in domestic law – and at the 
same time start the procedure under the AC.  However, the AC provides that where th e domestic law of a contracting state 
does not permit the competent authorities of that state to derogate form the 
decisions of their judicial bodies, the advisory commission shall not be set up 
unless the associated enterprise of th at state has allowed the time provided 
for appeal to expire, or has withdrawn any such appeal before a decision is 
delivered.  The AC guarantees expressly the res j udicata associated with a judicial 
judgment according to domestic law. Th e Belgian tax administration is not 
 
EN 82   EN empowered to conform to a decision r eached at the end of an arbitration 
procedure where this decision questions a judicial judgement in res judicata. 
 Therefore, up till now, the Belgian aut horities are of the opinion that the 
enterprises concerned have to make a choice between either continuing the 
procedure provided for in domestic la w or continuing the procedure provided 
for in the AC.  This position is stated in Circul ar AFZ/INTERN IB/98-0170 of July 7
th, 
2000. However, this circular will be updated and will contain additional clarifications concerning MAP, the advisory commission and other elements 
regarding the AC 
Bulgaria Bulgarian Administrative Procedure Code does not provide for a suspension 
of the initiated court proceedings on the grounds of pending administrative procedure (MAP). Therefore the Bulg arian Revenue Authorities, being 
bound to the court decision, would not be willing to proceed with the 
initiated MAP once a court appeal has been filed. However, the taxpayer has 
the option to withdraw his appeal a nd wait for the final MAP outcome. In 
such a case the Bulgarian Revenue Authorities would proceed with the negotiations with the other MS 
Cyprus No experience 
Czech Republic In practice, in case of judi cial proceedings out tax administration should 
interrupt MAP and wait for the decision of the judicial body 
Denmark We will continue the procedure an d inform the taxpayer once an agreement 
has been reached and then he has the choice to see the agreement implemented or to continue with his judicial appeals. 
Estonia It might be that we will stop negotiations 
Finland NA 
France Si cette renonciation n'est pas effect uée par l'entreprise, les discussions entre 
autorités compétentes dans la phase amiable de la procédure peuvent en 
pratique se poursuivre et, le délai de de ux ans n'étant réputé courir qu'à partir 
du moment où l'entreprise s'est désistée. Si un accord intervient durant cette 
période, il sera proposé à l'entreprise  qui pourra l'accepter et devra alors 
renoncer à tout contentieux pour pourvoir en bénéficier. Dans tous les cas, si 
les autorités compétentes parviennent  à un accord dans la phase amiable 
assurant l'élimination de la double im position, ce qui est la finalité de la 
convention européenne d'arbitrage, et  que l'entreprise n'accepte pas cet 
accord ou l'accepte en refusant de renoncer à un recours contentieux par 
ailleurs engagé, aucune commission cons ultative ne pourra être constituée 
dès lors qu'une solution amiable s'était dégagée 
Germany NA 
Greece See Q5 
Hungary As we have indicated formerly Hungary cannot give practical examples on 
the application of the Arb itration Convention yet. Theo retically, if there is a 
final judicial decision, Hungarian competent author ity has to dismiss the 
claim and must finish the process without any delay 
Italy An existing litigation does not preven t that the initial stage provided for by 
the Arbitration Convention – i.e. th e mutual agreement procedure – is 
started. Therefore, the mutual agreem ent procedure continues even if a 
litigation is in progress.  On the other hand, the situation is more complex 
 
EN 83   EN with respect to the second stage provid ed for by the above Convention, that 
is the arbitration stage.  Assumption n. 1. Both competent aut horities reach a mutual agreement 
before a decision has been delivered.  
 The Italian competent authority informs the taxpayer that they have reached an agreement. As a domestic appeal is pending, for the purposes of implementing any such agreement, the Italian competent authority needs an 
advance approval from the taxpayer on the content of the agreement between 
competent authorities and the simultaneous withdrawal of the existing appeal.  If the taxpayer does not give its appr oval and does not withdraw the appeal, 
the agreement reached cannot be implemented. In this case, however, the taxpayer can prosecute the domestic appeal. Obviously, since Italy cannot derogate from the decisions already made by 
its judicial authorities, once the decision has been  delivered, the taxpayer 
cannot request the implementation of the agreement.  
 Assumption n. 2. A decision is deli vered before the two competent 
authorities reach a mutual agreement  
Where a decision is delivered in favour  of the Italian tax administration23 and 
against the taxpayer before the latter withdraws its appeal , considering that 
Italy cannot derogate from the decisions made by the judicial authorities, the 
double taxation can be avoided only if the other State considers that the 
assessment made in Italy is correct and accepts to make a downward adjustment. In the absence of an agreem ent, however, it is not possible to set 
up an advisory commission. 
Ireland We have no experience of this as pect of the operation of the Arbitration 
Convention. Our general approach is that we would allow an appeal to 
remain open while there is a reasonable  prospect of a solution being found 
under a mutual agreement procedure. On ce an appeal comes for hearing, the 
taxpayer will have to make a decision as  to whether the appeal is to be 
withdrawn and the issue pursued under the Mutual Agreement/Arbitration 
Convention Procedure or is dealt with under the appeal procedure. 
 The competent authorities will not be in a position to set up an advisory 
commission unless the taxpayer concerne d has withdrawn any appeal against 
a matter to be dealt with by that commission 
Latvia Latvia stops the negotiations in such situation because there is no possibility 
to change the decision of judicial body. 
Lithuania No experience 
Luxembourg  
Malta If the case is under objection but has not pr oceeded to a judicial body, negotiations 
with the other Member State may continue, provided the other Member State 
agrees.  
If the case is under review by a judicial body,  then the taxpayer will need to decide 
                                                 
23 If the decision is in favour of the taxpayer , there will be no double taxation any more.  
 
EN 84   EN whether to continue under the Mutual Agreement Procedure or the domestic 
procedure. If the tax payer opts for the latte r, all negotiations with the other Member 
State will cease.  
 
Netherlands NA 
Poland Polish provisions regulating administ rative court procedure does not provide 
for automatic suspension of initiated court proceeding on the ground of pending MAP. Moreover, after final c ourt decision, Polish tax administration 
being bound to it, would not be able to proceed with MAP. However initiated MAP could be the reason for court to suspend proceeding (taxpayer’s or tax administration’s request is required). In  such case Polish tax administration 
would proceed with the MAP. 
Portugal Although no case of application of Ar t. 7 (3) is so far known to us, it is 
admissible that in practice the Ta x Administration may opt for the 
suspension of negotiations with the competent authorities of the other 
Member State if a taxpayer has a pending judicial appeal on the issue under 
consideration and has no inten tion to withdraw his appeal 
Romania No experience yet. Still it can be mentioned that a court decision is 
mandatory 
Slovak Republic If the taxpayer believes, that th e decision of the tax administrative bodies 
resulted in taxation, which is not in line  with the law, he may (does not have 
to) take legal action/complain. In case the taxpayer, who took legal act ion, decides the same matter to be 
resolved under the mutual agreement procedure between the competent authorities under the Arb itration Convention, he shoul d take this complaint 
back before the delivery of a judgement. Going on in negotiations under the MAP would be superfluous, because the agreement reached by the competent authorities would not be a pplied, if it derogated from the court 
decision 
Slovenia Slovenia did not have any cases und er the Arbitration C onvention yet. This 
means that there is not a lot of experience in this field. In general the taxpayer would have to d ecide whether to continue reaching an agreement 
under MAP or under domestic judicial appeal 
Spain As long as there is no judicial de cision, both MAP and judicial procedure can 
continue at the same time. Once an agreement is reached within a MAP, 
Spanish competent authorities will info rm the taxpayer and he will have the 
choice to see the agreement implemented or to continue with its judicial 
appeals 
Sweden NA 
United Kingdom NA 
Answers to question 5  
In general it may be useful to learn about a ny experience with the application of art 7(3). 
Where it is not yet covered by your answers to the previous questions could you describe your 
national experiences? 
Member State Question 5 
Austria  
Belgium  
Bulgaria No experience 
 
EN 85   EN Cyprus No experience 
Czech Republic  
Denmark NA 
Estonia No experience 
Finland NA 
France La France a été conduite en 2003 et 2005 à mettre en place avec l'Italie puis 
l'Allemagne une commission consultative sur des situations de double imposition en 
matière de prix de transfert entre entr eprises associées. Préalablement, les entreprises 
concernées avaient été amenées à se désister  de tout recours contentieux tendant à 
contester les redressements qui généraient la double imposition  
Germany In general it may be useful to le arn about any experience with the application 
of art 7(3). Where it is not yet cove red by your answers to the previous 
questions could you describe  your national experiences? 
 The majority of German arbitratio n cases, which are based on a German 
correction, are not brought before the court in Germany. In general, an 
objection is submitted and suspension of enforcement granted. After that, the case is conducted within  the framework of the Arbitration Convention. 
 Where it comes to court proceedings, the following applies: 
• The court proceedings do not halt negotiations with the other Member 
State. Instead, it is far more common for the proceedings to be suspended 
with the consent of the taxable person and of the court. 
• In cases where taxable persons prefer first to pursue the legal proceedings 
pending in Germany, the mutual agreem ent procedure is suspended until 
the lawsuit has been dealt with.  
 
In practice, Germany then ensures that pending appeals procedures (objection/lawsuit) are settled, inter alia, through the (where appropriate, 
partial) withdrawal of the objection/laws uit, prior to the implementation of a 
mutual agreement understanding through a tax assessment notice. Where no 
appeals procedure is pendi ng, the revenue authorities ensure that applicants 
abstain from the submission of an appeal , insofar as the results of the mutual 
agreement understanding are implemente d appropriately through the notice. 
 Where a case is taken to court in a fo reign country unable to derogate from 
its decisions, Germany conducts a mutu al agreement procedure pursuant to 
Article 6 of the Arbitration Conven tion. Germany does, however, take the 
view that the advisory commission may not be conve ned as long as the case 
is pending before the court abroad   
Greece Since, Greece has no practical experience on the operation of the Arbitration 
Convention, regarding the a pplication of Art. 7 (3), we can not give answers 
to questions 4 and 5 of the questionnaire at this stage. 
But, we would like inform you that a question regarding this matter is 
forwarded to the Legal Council of the State, in order to  provide JTPF with 
our fully formal position. 
 
EN 86   EN Hungary As to our experiences on national leve l, if the tax office faces a final judicial 
decision in course its process, the tax office must finish the process as soon 
as possible without fu rther investigation. 
Italy It could be useful to learn about th e experience or the position (if it is too 
early to talk of experience, taking into  account the recent entry into force of 
the Prolongation Protocol) of countries applying article 7, paragraph 3 with 
reference to the computation of the two-years period, in the case where the 
taxpayer withdraws the appeal befo re a decision has been delivered. 
Should the taxpayer withdraw the a ppeal before a d ecision has been 
delivered, if no mutual agreement has been reached between the competent 
authorities, it is possible to start the arbitration stage. But how shall the two-
years period be computed? According to article 7, paragraph 1, 2nd indent, 
read in conjunction with paragraph 3 of  the same article 7, it can be assumed 
that the two-years time limit starts from the date when the taxpayer withdraws the first-instance appeal. It c ould be useful to learn whether this 
position is shared by all countries  applying article 7, paragraph 3. 
Ireland No experience 
Latvia  
Lithuania No experience 
Luxembourg  
Malta No experience 
Netherlands No experience 
Poland No experience 
 
Portugal No experience 
Romania No experience 
Slovak Republic No experience 
Slovenia On national level we would like to note that the Arbitration Convention was 
set into force on 24 October 2007 when it was passed through by the 
Parliament. We do not have much experi ence in the filed of the application 
of Art.7(3). In general when inspecting a taxpayer the procedure is as follows: After the tax inspection the tax inspector issues a provision. The taxpayer can file an 
appeal to the governmental body in this cas e, to the Ministry of Finance. If 
not satisfied with the outcome the taxpayer can than make a complain to the administrative (higher) court. Regardless to the complain the taxpayer is obliged to pay the penalties and late in terests stated in the provision. If the 
penalties and late in terests are in the course of  appeal proven to be wrong 
they will be returned to the taxpayer 
Spain / 
Sweden In Sweden we have traditionally ta ken the below described approach, but this 
is not something that follows from the law. It is just a practise that the 
competent authority (the Ministry of  Finance and the Swedish Tax Agency) 
adhere to. From a formal point of view  a case can be tried simultaneously by 
both a Court and the compet ent authority. However, fr om a practical point of 
view in most cases we have chosen not to do so. Instead, as competent 
authority we normally choose to have our  case rest and wait for the court(s) 
to decide its case. There is nothing in Swedish law or practise that suggests 
that a court should rest its case only  because a mutual agreement procedure 
has been initiated. 
 
EN 87   EN  
There are two reasons for this practise. Fi rst of all, a taxpayer always has the 
right to go to court. If he has also chosen to initiate a mutual agreement 
procedure he still has the right under Sw edish law to have his case tried by a 
court. If he wins his case in a court there will be no double taxation to eliminate. If we and the other competent authority have spent a lot of time on 
the case this will of course be wasted. In such a situation we believe it is 
better to spend our resources on other cases.  The second reason is that the mutu al agreement procedure under a tax 
agreement is intended to be an extra ordinary or last re sort in order to 
eliminate double taxation that can not be avoided in the regular procedures. The intention is not for the mutual agreement procedure to replace existing and regular procedures. It is also our experience as competent authority that 
it is easier to handle a case if at leas t one court has already tried it. The case 
is often better analysed in such a situa tion. But of course, it is always up to 
the taxpayer to decide whether he  wants to go to court or not. 
United Kingdom NA 
 
 
EN 88   EN ANNEX IX: STATE OF PLAY OF THE IMPLEMENTATION OF THE CODE OF CONDUCT RELATED 
TO THE ARBITRATION CONVENTION (DOC: JTPF/006/BACK/REV5/2006/EN)  
1. Introduction 
The Code of Conduct for the effective implementation of the Arbitration Convention 
(90/436/EEC of 23 July 1990) was adopted by the Council of the European Union in 
December 2004. 
The JTPF agreed in its working programme to  monitor the implementation of the code. 
Therefore Member states have been invited to  report on the way they have implemented this 
soft law instrument in their nationa l laws or administrative practices. 
It was considered as particularly important to give taxpayers the opportunity of knowing how 
Member states were dealing with point 5 of  the Code on the suspension of tax collection 
during cross border dispute resolution procedures: " Member States  are recommended  to take 
all necessary measures to ensure that the suspension of tax collection during cross-border 
dispute resolution procedures under the Ar bitration Convention can be obtained by 
enterprises engaged in such procedures, under the same conditions as those engaged in a 
domestic appeals/litigation procedure  although these measures may imply legislative changes 
in some Member States. It would be appropriate  for Member States to  extend these measures 
to the cross-border dispute resolution proce dures under double tax treaties between Member 
States" . 
2. Answers provided by EU tax administrations 
AUSTRIA  
a) Implementation of the Code of Conduct on the Arbitration Convention:  
According to the work programme 2006 Austria in tends to issue admini strative guidelines on 
transfer pricing. In the drafti ng of these guidelines the Code of Conduct of the AC will be 
taken into consideration. 
b) Position/situation in resp ect of the suspension of tax  
Payment facilities a suspension of tax collection: Generally it is possible to apply for a deferral of tax payments or a payment of the taxes in 
instalments (Section 212 of the Federal Fiscal Procedure Act – § 212 Bundesabgabenordnung/BAO). 
As far as the suspension of tax collection is concerned, currently it  is only possible in 
connection with an appeal against the decision of the tax office (Section 212a of the Federal 
Fiscal Procedure Act – § 212a Bundesabgabenordnung/BAO). 
In principle, a similar treatment could also be  envisaged in the contex t of mutual agreement 
procedures based either on DTC or on the AC. Such measures w ould in any case only apply 
in “bona fide” case and comprise only that part  of the tax due in relation to double taxation 
caused by the profit adjustment. 
 
EN 89   EN BELGIUM  
The Code was already implemented before  its official adoption by the Council. 
CYPRUS  
In Cyprus we have implemented the Code  of Conduct on the Arbitration Convention, 
including the suspension of tax collection, in the administrative practice of the Department of 
Inland Revenue through Circular 2007/5 i ssued on the 15th Feb 2007 and Regulation No 
87/2007 published in the Official  Gazette No.4176 dated 23/2/2007 
The Cyprus Tax Administration is able and wi lling to suspend tax co llection as recommended 
by the Code by virtue of the pr ovisions of the Assessment and Collection of Taxes Laws (Art. 
4,38,39,&40) and the provisions of the Income Tax Laws (Art.3&45). 
CZECH REPUBLIC  
The CoC has been published through the websites of the Czech Tax Administration. In case 
of application AC we will follow recommendati ons done by this CoC. Thus its principles 
shall be implemented through the administrative practice. 
As regards the suspension of tax collection duri ng cross-border dispute resolution procedures 
under conditions of our tax law any remedies generally have no suspending effect. Exceptionally, the taxpayer may request the tax administrati on either to defer his tax 
payments or to allow him to pay by instalme nts, if immediate paym ent would cause serious 
detriment to the tax debtor or if it is impossibl e for other serious reason s to collect all of the 
tax arrears from the tax debtor. 
DENMARK
 
Through an administrative decision from  January 7th 2005 (“SKM2005.2.TSS”) we have 
implemented the CoC on the AC in Danish administrative, legal practice by saying that “the Danish tax administration will appl y the CoC when applying the AC.” 
ESTONIA
 
In Estonia, as for The Code of Conduct on th e Arbitration Convention, we will not implement 
it into our national legislation, but we will impl ement it in practice as it is soft law. No 
practice has been so far developed. 
The suspension of tax collection  is possible according to the Estonian Taxation system 
already. (Estonian Taxation Act § 128(2) 5 and § 146(3)). 
FINLAND  
The competent authorities are aware of the Code  and are committed to abide by it, but formal 
implementation is not planned. 
Deferral of the payment of tax in cases of in ternational double taxation is allowed by article 
90 of the Tax Procedure Act (90§ La ki verotusmenettelystä 18.12.1995/1558) 
FRANCE  
 
EN 90   EN La France a soutenu sans réserve les travau x les travaux du Forum conjoint de l’Union 
européenne qui ont débouché par l’adoption par le Conseil d’un Code de conduite sur la mise 
en œuvre de la convention européenne d’arbitrage. 
La France a publié le 23/02/2006 une instructi on qui actualise sa doctrine en matière de 
traitement des procédures amiables ouvertes tant  dans le cadre de la convention européenne 
d’arbitrage que dans le cadre d’ un traité bilatéral. Elle repr end les conclusions du Code de 
conduite pour la mise en œuvre de la conventio n européenne d’arbitrage et s’inspire de celui-
ci pour les procédures amiables bilatérales. 
Par ailleurs, la France a adopt é un texte spécifique – l’articl e L189A du Livre des procédures 
fiscales – qui met en place une procédure de su spension de la prescription de la mise en 
recouvrement en cas d’ouverture d’une procédure amiable, quel qu’en soit son type. Le texte 
en est le suivant. 
«Lorsqu'à la suite d'une proposit ion de rectification, une procédure amiable en vue d'éliminer 
la double imposition est ouverte sur le fondement d' une convention fiscale bilatérale ou de la 
convention européenne 90/436/CEE relative à l'é limination des doubles impositions en cas de 
correction des bénéfices d'entreprises asso ciées du 23 juillet 1990, le cours du délai 
d'établissement de l'imposition correspondante est suspendu de la date d'ouverture de la 
procédure amiable au terme du troisième mois qui suit la date de la notification au 
contribuable de l'accord ou du constat de désaccord intervenu entre les autorités compétentes.» 
Ces dispositions sont applicable s aux procédures amiables ouve rtes à compter du 1er janvier 
2005. 
GERMANY
 
Germany has revised its Manual on Mutual Ag reement and Arbitration Procedures. The 
revised version of the Circular Letter, which takes account of the Code of Conduct, was 
issued on 13th July 2006. As regards th e suspension of tax collec tion during MAPs under the 
Arbitration Convention or a double tax treaty with another Memb er State, the Ministry of 
Finance is currently examining possible legislative amendments to the General Tax Code that would allow for the suspension of tax colle ction outside of an appeal procedure. 
GREECE
 
According to the legislation in force in Greece, in  case of an appeal within the prescribed time 
on behalf of the taxpayer against tax admi nistration assessment decisions, an amount 
representing 10% of the tax in dispute (main tax, added tax and remaining taxes and duties assessed with it) must still be paid. The asse ssment of the remaining 90% is suspended until 
the relevant judicial  decision is taken. 
Moreover, according to the pr ovisions of articles 200-205 of C ode of Administrative (Legal) 
Procedure the collection of the above mentioned percentage of pre-assessment (10%) can also 
be suspended, by those especially  defined in these provisions. 
The above concern generally all the taxpayers and all types of tax disputes. Therefore also 
apply to disputes for which a cross bo rder procedure sett lement is pending. 
 
EN 91   EN Consequently, we believe that it is not necessa ry to introduce additional legislative measures 
for the suspension of tax collection, especially  in cases where disput e resolution procedures 
are in progress, since this issu e is already covered, even indi rectly, by the existing legislation. 
When these issues are finalized at European Community Level and legislative adaptations are 
deemed necessary, the Greek Tax Administ ration will examine the whole matter anew. 
HUNGARY  
The Hungarian Government had accepted the c oncept and draft of Act of Parliament on 
modifications of Tax Procedur e Act on 26th of September 2007. As the Parliament had voted 
this draft, the Amending Act ha d been published under the title “Act CXXVI of 2007” on 16th 
of November 2007. 
The Amending Act incorporated some significa nt rules of Code of Conduct, such as: 
(i) suspension of tax collection (ii) formal acknowledgement of receipt of ta xpayer's request, minimum content of request, 
starting point of 2-year-deadline. 
These incorporative rules ha d been set out in Art. 176/ A. of Act XCII of 2003 on Tax 
procedure with retroactive eff ect. According to the decision N o. 35/2007. (XII. 4.) of Minister 
of Foreign Affairs, these incorporative ru les and the Act on AC came into effect 
simultaneously, from 1
st of July 2006 to 1st of November 2007. 
IRELAND  
Staff in the Competent Authority area have been made aware of the Code of Conduct. 
As regards suspension  of tax collection  during cross-border disput e resolution procedures, 
where an assessment is made on a taxpayer in respect of any undercharge to tax, the taxpayer is entitled to enter an appeal against the assessment. The taxpayer is required to pay the tax that, in the taxpayer’s opinion, is due and payable. The balance of the tax involved will be suspended pending determination of the appeal. In general, the competent authority will be prepared to allow an appeal to remain ope n while an alternative procedure for dispute 
resolution has a prospect of resolving the point at issue. 
ITALY
 
In order to apply the code of conduct, Ital y does not need to implement it in its own 
legislation. Presently all offices  involved in MAP AC are aware of its existence and of its 
importance and are doing their best in order to apply it. 
We will give appropriate publicity to the c ode of conduct, publishing it on two websites: 
Department of Tax Policy’s and Revenue Agency’s. 
As far as it regards the suspension of tax collection  during a MAP AC, the Italian law n. 99 of 
22 March 1993, which ratified the Arbitra tion Convention, already provided for the 
suspension of the collection or of  the execution proceedings to inte rnational disputes started in 
accordance with the Arbitration Convention. 
 
EN 92   EN LATVIA  
As the Arbitration Convention was ratified and is in force in Latvia si nce 1 June, 2007, Latvia 
hasn’t any intend at this moment regarding im plementation of Code of  Conduct in legislative 
way. The Code of Conduct as it is soft law will be accepted as a best practice and will be 
considered in developing the administrativ e guidelines and admi nistrative practice.  
Suspension of tax collection:  
The domestic law of Latvia provides the provi sions which allow suspending of tax collection 
when the tax assessment of tax administration is litigated or appealed. Also the tax collections’ suspension is possible on the de cision of tax administration. Such a decision 
could be used also in the sc ope of Arbitration Convention. 
LITHUANIA
 
Implementation of Code of Conduct on the Arbitration Convention 
The Tax Administration of Lithuania hasn't pl ans for any kind of formal implementation of 
the Code on Conduct of the AC. It will be impl ement in administrative practices. Also Tax 
Administration is preparing Guide lines on transfer pricing and in  drafting of these Guidelines 
the Code of Conduct will be taken in consideration. 
Situation concerning the suspension of tax  
In our Law on Tax Administration we have a provision that allo ws for the suspension of tax 
collection when taxpayer appeal agai nst the tax administrator's decision. 
LUXEMBOURG  
There seems to be no need to implement the code of conduct into national  legislation (or parts 
of it), the code has been made available to tax administration members involved in mutual 
agreement procedures. 
The tax administration is able and willing to suspend tax collection as recommended by the 
code. 
MALTA  
With regard to the Code of Conduct, the Legal Notice incorporat es the Arbitration 
Convention into Maltese Law and specifies that th is Convention is to be interpretated in line 
with the said Code. 
Suspension of tax collection:  
Article 41(1) of the Income Ta x Management Act states that: 
"Where notice of objection or appeal against an assessment has been given, the Commissioner 
may, in his discretion, keep in abeyance the coll ection of not less than ninety per cent of that 
part of the tax assessed ther e under which is in dispute." 
 
EN 93   EN This legislation applies to all disputes, whether purely domestic or cross-border. Furthermore, 
the practice of the Inland Revenue (even before the existence of the Code) has been to apply 
such discretion so as not to collect 90 % (at least) of the tax in dispute. 
NETHERLANDS  
The Netherlands has updated an d streamlined its publications on mutual agreement 
procedures. The Code of Conduct on the Arbitr ation Convention is included in the updated 
decree  (IFZ2008/ 248M  of 29 September 2008). In practi ce the Netherlands had already 
started to apply th e Code of Conduct. 
Suspension of tax collection Par. 3.1.8. of the Netherlands' Ministry of Fi nance of Decree No. IFZ 2001/295M, officially 
published in Dutch on 30 March 2001 reads: “Wher e the Netherlands is the state making the 
adjustment, the Netherlands' tax administrati on will upon request grant a deferral of payment 
on that part of the tax charge that is related to  the adjustment. In principle, deferral will be 
granted until the date on whic h both the domestic and the in ternational procedures for 
resolving the dispute have been completed. Th e policy in this respect will be based on the 
policy applying to objections lodged against ta x assessments (see Article 25, Paragraph 2, of 
the Tax Collection Guidelines 1990 ( Leidraad Invordering  1990)).” 
POLAND
 
Poland is going to issue the decree of the Mi nister of Finance, consequently regulations 
stipulated in CoC will be included in that act. Suspension of tax collection is possible (taxpayer’s request is required) in certain situations: i) in case of important interest of 
taxpayer, ii) in case of importa nt State interest. In both cases decision is taken by head of tax 
office. 
PORTUGAL
 
Some administrative guidelines  are presently under way to di sclose through the website the 
provisions of the Code of Conduct. It is also d eemed to be necessary to introduce, as soon as 
possible, a change to the legal regulations on transfer pricing for that part concerning the 
procedures in respect of th e so-called “corresponding adjustments” with the purpose of 
establishing that the Code of Conduct shall apply to those cases covered by the Arbitration 
Convention. 
Suspension of tax collection: The suspension of payment of tax under the prov isions of the arbitra tion convention will be 
implemented as from January 2008. 
SLOVAK REPUBLIC
 
The Code of Conduct for the effective implemen tation of the Arbitration Convention has been 
published by the Ministry of Fi nance of the Slovak Republic on its official  website and should 
be followed as an administrative practice wh en resolving the cases under the Arbitration 
Convention. Moreover, some of its issues are planned to be published as a part of further 
methodological guidance for the tax administrati on and public after th e ratification of the 
Arbitration Convention/Accession Conventi on by all relevant Member States. 
 
EN 94   EN Suspension (deferral) of tax collection: 
Generally, according to Slovak tax law (Tax Administration Act No. 511/1992 Coll., section 
59, para. 2 and 4), tax authority can permit su spension of tax collec tion or payment in 
instalments based on the request of taxpayer. This  suspension of tax collection or payment in 
instalments can be permitted by the tax author ity for a period of ma ximum 12 months from 
the day when the tax payment is due. 
SLOVENIA  
In Slovenia, Accession Convention to the Ar bitration Convention has been implemented 
through the Law on Ratification of the Accession  Convention. According to the legal system 
in Slovenia the Code of Conduct could be im plemented through the law – amendment of the 
Tax Procedure Act. 
SPAIN  
Spain has updated its domestic TP rules (New  regulation included in Law 36/2006 published 
in the official gazette on 30th.November 2006). The preamble of the law refers explicitly to 
the reports of the Transfer Pricing Forum. It  also introduces suspen sion of recollection of 
taxes when a MAP or AC is requested. 
SWEDEN  
We consider the procedure currently used in Sw eden in line with the ru les set up in the Code 
of Conduct on the Arbitration Convention and ther efore have not taken any specific steps of 
implementation. 
The Swedish system regarding penalties, tax su rcharge, is based on th e taxpayer providing the 
Tax Authority with misleading, incorrect or insufficient information. Remission of the tax 
surcharge might be given in ce rtain situations. Tax collections  can be suspended during any 
MAP. 
The legal reference relevant for the possibility to grant suspension in Sweden is 17:6 in the 
Tax Collection Act. (Chapter 17, paragraph 6). 
UNITED KINGDOM  
The Code of Conduct on the Arbitration Convent ion is accepted as best practice by the UK. 
Consideration is being given to  further publicity for the best practice that would be helpful 
alongside other issues that  arise in operating mutual agreement procedures. 
Questions about tax collection are matters of dom estic law. Where any discretion is allowed, 
the terms of the Code of Conduct are recognised as best practice. 
3. Summary table: 
This table derived by Secretariat from MS replie s and describes the actual situation (at the 
beginning of February 2008). 
Member 
States Implementation 
through a legislative Implementation 
through Possibility to suspend tax 
collection / legal 
 
EN 95   EN instrument / legal 
reference  administrative 
practice / 
administrative 
reference   reference  
Austria  In preparation YES 
section 212a and section 
48 
Bundesabgabenordnung 
(BAO) Federal Fiscal 
Procedure Act 
Belgium  YES YES 
Art 410 clause 3 of 
Belgian Income Tax Code 
1992 
Cyprus  YES 
Circular 2007/5 
dated 15/02/2007 YES 
Income Tax Laws 2002-
2006 Art. 3 & 45 
Regulation Nr 87/2007 
published in the Official 
Gazette No.4176 dated 
23/02/2007. 
Czech Republic  YES 
 Exceptionally 
Denmark  YES 
Administrative 
decision (SKM 
2005.2.TSS) YES 
Art. 51 of the Tax 
Administration Act 
Estonia  YES YES 
Taxation Act §128(2) 5 
and §146 (3) 
Finland  YES YES 
Art. 90 of the Tax 
Procedure Act  
France  YES YES 
Livre des procedures 
fiscales 
Art. L189A 
Germany  YES yes §361 paragraph 2 AO 
(General Tax Code) 
Greece  YES YES 
 
Hungary Art. 176/A. of Act 
XCII of 2003 on 
Tax Procedure  NO 
(in preparation) YES 
para (6) of Art. 176/A. of Act XCII of 2003 on Tax 
Procedure 
Italy  YES YES 
Law nr.99 of 22 
arch 1993 
Ireland  YES YES 
Part 41 of the Taxes 
 
EN 96   EN Consolidation Act 199724 
Latvia  In preparation YES 
Lithuania  NO 
In preparation YES 
Chapter 110 of the Law on 
Tax Administration 
No IX-2112 
Luxembourg  YES YES 
Loi générale des impôts 
22/05/1931 § 251 
Malta YES 
Legal notice  YES 
Art. 41 of the Income Tax 
Management Act 
Netherlands YES 
Decree  YES 
Par. 3.1.8. of Decree No. 
IFZ 2001/295M 
Poland  YES YES  
art. 67a §1 pkt 2 Tax 
Ordinance 
Portugal  YES NO 
In 2008 a new legislative 
procedure will provide for 
suspension 
Slovak Republic  YES Exceptionally 
Slovenia ? NO 
In preparation NO 
In preparation 
Spain YES ( 36/2006 
Preamble) YES YES  
( l.36/2006 D.A.1ª) 
Sweden  YES YES 
Chapter17, paragraph 6 in 
the Tax Collection Act 
United Kingdom  YES YES 
 
                                                 
24 As regards suspension of tax collection during cross-border dispute resolution procedures, where an 
assessment is made on a taxpayer in respect of any undercharge to tax, the taxpayer is entitled to enter 
an appeal against the assessment. The taxpayer is requ ired to pay the tax that, in the taxpayer’s opinion, 
is due and payable. The balance of the tax involv ed will be suspended pending determination of the 
appeal. In general, the competent authority will be pr epared to allow an appeal to remain open while an 
alternative procedure for dispute resolution has a prospect of resolving the point at issue. 
 
EN 97   EN ANNEX X: JTPF  PROPOSAL FOR A REVISED CODE OF CONDUCT  
DRAFT REVISED CODE OF CONDUCT FOR THE EFFECTIVE 
IMPLEMENTATION OF THE CONVENT ION ON THE ELIMINATION OF 
DOUBLE TAXATION IN CONNECTION WITH ADJUSTMENT OF PROFITS OF 
ASSOCIATED ENTREPRISES  
THE COUNCIL OF THE EUROPEAN UNION AND THE REPRESENTATIVES 
OF THE GOVERNMENTS OF THE ME MBER STATES, MEETING WITHIN 
THE COUNCIL,  
HAVING REGARD TO the Convention of 23  July 1990, on the elimination of 
double taxation in connection with the adjustme nt of profits of associated enterprises 
(the "Arbitrati on Convention"), 
ACKNOWLEDGING the need both for Member States and taxpayers to have more 
detailed rules to implement effici ently the aforementioned Convention, 
NOTING the Commission communication of on  the reports on the interpretation of 
some provisions of the AC and penalties in cluding a proposal for a revised Code of 
Conduct, 
EMPHASISING that the Code of Conduct is  a political commitment and does not 
affect the Member States' rights and obligations or the respective spheres of 
competence of the Member States and the Community resulting from the Treaty, 
ACKNOWLEDGING that the implementation of this Code of Conduct should not 
hamper solutions at a more global level, 
NOTING the conclusions of the report on penalties, HEREBY ADOPT THE FOLLOWING RE VISED CODE OF CONDUCT: 
Without prejudice to the respective spheres of competence of the Member States 
and the Community, this revised  Code of Conduct concerns the implementation 
of the Arbitration Convention and cert ain related issues of the mutual 
agreement procedure under double tax treaties between Member States.  
1. Scope of the Arbitration Convention 1.1 EU triangular transfer pricing cases 
a) For the purpose of this Code, a EU tr iangular case is a case where the two 
contracting Member States to a Mutual Agreement Procedure, presented under their 
Double Tax Treaties, cannot fully resolve any double taxation arising in a transfer 
pricing case when applying the arm’s le ngth principle because an associated 
enterprise situated in another Member State(s) and  identified by both EU Competent 
Authorities (evidence based on the comp arability analysis including a functional 
analysis and other factual elements) had a significant influence in contributing to a non arm’s length result in a chain of relevant  transactions or commercial / financial 
 
EN 98   EN relations and recognised as such by the taxpayer suffering the double taxation and 
requesting the Mutual Agreement Procedure. 
b) The scope of the Arbitration Convention includes all EU transa ctions involved in 
triangular cases amongst Member States 
1.2 Thin capitalization25 
The Arbitration Convention makes clear refe rence to profits arising from commercial 
and financial relations but does not seek to differentiate between these specific 
profits types. Therefore profit adjustments arising from financial relations including a 
loan and its terms and based on the arm's lengt h principle are to be considered within 
the scope of Arbitration Convention. 
                                                 
25 Reservations on the scope of the AC: Thin Capitalization  
Bulgarian reservation:  Bulgaria holds the view that profit adjustments arising from an adjustment to the price of 
a loan (i.e. the interest rate) fall within the scope of the Arbitration Convention. On the contrary, Bulgaria considers that the Arbitration Convention do es not cover cases of profit adjustments based on 
adjustments to the amount of financing. In principle the grounds for such adjustments lay in the 
domestic legislation of MS. The operation of varying national rules and the absence of an internationally recognized arms’ length set of guidelines  to be applied to a business’ capital structure, to 
a great extent challenge the arms’ length character of profit adjustments based on adjustments to the 
amount of a loan. 
Czech reservation:
 The Czech Republic shall not apply the mutu al agreement procedure under the Arbitration 
Convention in case that is a subject to the anti-abuse rules under the domestic law. 
Dutch reservation:  The Netherlands endorses the view that an adjustme nt of the interest rate (pricing of the loan) 
which is based on national legislation based on the arm’s length principle falls within the scope of the 
Arbitration Convention. Adjustments of the amount of the loan as well as adjustments of the 
deductibility of the interest based on a thin capitali zation approach under the arm’s length principle or 
adjustments based on anti-abuse legislation based on the arm’s length principle are considered to fall 
outside the scope of the Arbitration Convention. The Netherlands will preserve its reservation until there is guidance from the OECD on  how to apply the arm’s length principle to thin capitalization of 
associated enterprises.
 
Hungarian reservation : Hungary considers only those cases fall w ithin the scope of the AC where double 
taxation is due to the adjustment of the interest rate of the loan and the adjustment is based on the ALP. 
Italian reservation:  Italy considers that the Arbitration Convention may be invoked in case of double taxation due 
to a price adjustment of a financial transaction not in accordance with the arm’s length principle. 
Conversely, it cannot be i nvoked to solve double ta xation arising from adjust ments to the amount of 
loans, or double taxation occurred because of the differences in domestic rules on the allowed amount 
of financing or on interest deductibility  
Latvian reservation: Our understanding is that the Arbitration Convention cannot be invoked in case of double 
taxation arising as a result of application of general national legislation on adjustments of the amount of 
a loan or on deductibility of interest payments, that is not based on the arm’s length principle provided for in Article 4 of the Arbitration Convention. 
Therefore, Latvia considers that only adjustments of interest deductions performed under national legislation 
based on the arm’s length principle are within the scope of the Arbitration Convention. 
Polish reservation:
 Poland considers that procedure stipulated by Arbitration Convention may be applicable only 
in the case of interest adjustments. While adjustments concerning amount of a loan should not be 
covered by the Convention. In our opinion it is quite impossible to define how capital structure should look in practice in order to be in line with arm's length principle. 
Portuguese reservation:
 Portuguese Tax Administration considers that the Arbitration Convention is applicable 
to the remuneration of the loan but profit adjustments arising from corrections to the amount of a loan 
between associated companies are considered to be  outside the scope of the Arbitration Convention. 
Slovakian reservation:  We are of the opinion that an adjustment of the interest rate which is based on national 
legislation based on the arm’s length principle should fall within the scope of the Arbitration 
Convention but the adjustments to profits arising as a result of the application of anti-abuse rules under 
domestic legislation should fall outside the scope of the Arbitration Convention 
 
EN 99   EN 2. Admissibility of a case 
On the basis of Article 18 of the Arbitration Convention Member States are 
recommended to consider that a case is covered by the provisions of the Arbitration 
Convention when the request is timely presen ted after the date of entry into force of 
the accession to the Arbitration Convention by the new Member States, even if the 
adjustment applies to earlier fiscal years. 
3. Serious penalties 
As Article 8.1 provides for flexibility as re gards the refusal to give access to the 
Arbitration Convention due to the existence of a serious penalty and considering the 
practical experience acquired since 1995, Member States ar e recommended to clarify 
or revise their unilateral st atements in Annex of the Ar bitration Convention in order 
to better reflect that a seri ous penalty should only be appl ied in excepti onal cases like 
fraud.  
4. The starting point of the three-year period (deadline for submitting the 
request according to Article 6 (1 ) of the Arbitration Convention) 
The date of the “first tax assessment notice or equivalent which results or is likely to 
result in double taxation within the mean ing of Article 1, e.g. due to a transfer 
pricing adjustment”26 is considered as the starting point for the three-year period.  
As far as transfer pricing cases are con cerned, Member States are recommended to 
apply this definition also to the determina tion of the three-year period as provided for 
in Article 25 (1) of the OECD Model Tax Convention on Income and on Capital and implemented in the double tax trea ties between EU Member States.  
5. The starting point of the two-year p eriod (Article 7 (1) of the Arbitration 
Convention) 
(i) For the purpose of Article 7 (1) of th e Arbitration Convention, a case will be 
regarded as having been submitted according to Article 6 (1) when the taxpayer provides the following: 
a) identification (such as name, addre ss, tax identificati on number) of the 
enterprise of the Contracting State th at presents its request and of the 
other parties to the relevant transactions; 
b) details of the relevant facts and circumstances of the case (including 
details of the relations between the en terprise and the other parties to the 
relevant transactions); 
c) identification of the tax periods concerned; 
                                                
 
26 The tax authority Member from Italy considers ‘the date of the first tax assessment notice or equivalent 
reflecting a transfer pricing adjustment which results or  is likely to result in double taxation within the 
meaning of Article 1’ as the starting point of the th ree-year period, since the application of the existing 
Arbitration Convention should be limited to those cases  where there is a transf er pricing ‘adjustment’. 
 
EN 100   EN d) copies of the tax assessment noti ces, tax audit report or equivalent 
leading to the alle ged double taxation; 
e) details of any appeals and litigation procedures initiated by the enterprise 
or the other parties to the relevant transactions and an y court decisions 
concerning the case; 
f) an explanation by the enterprise of why it thinks that the principles set 
out in Article 4 of the Arbitration Convention have not been observed; 
g) an undertaking that the enterpri se shall respond as  completely and 
quickly as possible to all reasonabl e and appropriate requests made by a 
Competent Authority and have docume ntation at the disposal of the 
Competent Authorities; and 
h) any specific additional information requested by the Competent 
Authority within two months  upon receipt of the taxpayer’s request. 
(ii) The two-year period starts on th e latest of the following dates: 
a) the date of the tax assessment noti ce, i.e. a final decision of the tax 
administration on the additional income, or equivalent; 
b) the date on which the Competent Au thority receives the request and the 
minimum information as stated under point 5 (i). 
6. Mutual agreement procedures under the Arbitration Convention 
6.1 General provisions 
a) The arm’s length principle will be ap plied, as advocated by the OECD, without 
regard to the immediate tax consequences  for any particular Contracting State. 
b) Cases will be resolved as quickly as possible having regard to the complexity 
of the issues in the part icular case in question. 
c) Any appropriate means for reaching a mutual agreement as expeditiously as 
possible, including face-to-face mee tings, will be considered; where 
appropriate, the enterprise will be invi ted to make a presentation to its 
Competent Authority. 
d) Taking into account the provisions of th is Code, a mutual ag reement should be 
reached within two years of the date on which the case was first submitted to one of the Competent Authorities in accord ance with point 5 (ii) of this Code. 
It is however recognised that in some  given situation (e .g. imminent resolution 
of the case or particularly complex tran sactions, or triangular cases) it may be 
appropriate to apply Article. 7(4) (ext ending time limits) to agree a short 
extension
. 
e) The mutual agreement procedure s hould not impose any inappropriate or 
excessive compliance costs on the person re questing it, or on any other person 
involved in the case. 
 
EN 101   EN 6.2 EU triangular transfer pricing cases 
a) One of the following approaches may be adopted by the Competent Authorities 
involved to resolve double taxation arisi ng from an EU triangular cases under 
the Arbitration Convention. 
1. Competent Authorities can decide to take a multilateral approach 
(immediate and full participation of all Competent Authorities concerned); or 
2. Competent Authorities can decide to  start up a bilateral procedure and 
should invite the other EU Competent Authority (ies) to participate as 
(an) observer(s) to the Mutual Ag reement Procedure discussions. The 
two parties of the bilateral procedure being the Competent Authorities having identified (based on the co mparability analysis including a 
functional analysis and other factual elements) the associated enterprise 
situated in another Member State that had a significant influence in 
contributing to a non arm’s length re sults in the chain of relevant 
transactions or commercial  / financial relations; or 
3. Competent Authorities can decide to  start up more than one bilateral 
procedure in parallel and should invite the respective other EU 
Competent Authority (ies) to participat e as (an) observer(s) to the Mutual 
Agreement Procedure discussions. 
 Considering the pros and cons of th e above approaches Member States are 
recommended to apply a multilateral pro cedure to resolve the double taxation. 
However this should always be agreed  by all Competent Authorities based on 
the specific facts and circumstances of the case. If a multilateral approach is not possible and a two (or more) parallel  bilateral procedure is adopted, all 
relevant Competent Authorities should be involved in the Mutual Agreement Procedure stage one discussions either as a Contracting State to the initial 
Arbitration Convention applicati on or as (an) observer(s). 
b) As soon as Contracting States Competen t Authorities have ag reed that the case 
under discussion is to be  considered a EU tria ngular case they should 
immediately invite the other EU Competen t Authority(ies) to take part in the 
proceedings and discussions as (an) obser ver(s) or as (an) active stakeholder(s) 
and decide together which is their favoured approach . To that extent all 
information should be shared with th e other EU Competent Authority(ies) 
through for example Exchange of Information. The other Competent 
Authority(ies) should be invited to acknowledge the actual or possible 
involvement of “his” taxpayer. 
c) The other EU Competent Authority(ies ) could be invited as (an) observer(s) 
during the first stage of the Arbitr ation Convention procedure (Mutual 
Agreement Procedure). The status of observer may then shift to that of 
stakeholder(s) depending on the development of the discussions and evidence presented. If that other Co mpetent Authority (ies) want(s) to participate in the 
proceedings of the second stage (arbitrati on), it (they) has (have) to become (a) 
stakeholder(s). 
 
EN 102   EN  If the other EU Competent Author ity (ies) remain(s) throughout as (a) 
party(ies) to the discussions as (an) observer(s) only, that shall not have any 
consequence on the application of the pr ovisions of the Arbitration Convention 
(e.g. timing issues and procedural issues).  
 Attendance in the role of observer does not bind the observer(s) Competent 
Authority (ies) to the final outcome of  the Arbitration C onvention procedure. 
 In the process any exchange of inform ation must comply with the normal legal 
and administrative requirements and procedures. 
d) The taxpayer(s) should, as soon as possi ble, inform the tax administration(s) 
involved that (an) other pa rty(ies), in (an) other Me mber State(s), could be 
involved in the case. That notification should be followed in a timely manner by the presentation of all relevant facts and supporting documentation. Such an approach will not only lead to quicker re solution but also guard against the non 
resolution of double taxation issues by vi rtue of differing Member States` 
procedural deadlines. 
6.3 Practical functioning and transparency  
a) In order to minimise costs and de lays caused by translation, the mutual 
agreement procedure, in particular the exchange of position papers, should be 
conducted in a common working language, or in a manner having the same effect, if the Competent Authorities can reach agreement on a bilateral (or 
multilateral) basis.  
b) The enterprise requesting the mutual agreement procedure will be kept 
informed by the Competent Authority to which it made the request of all significant developments that affect it during the course of  the procedure. 
c) The confidentiality of in formation relating to any pe rson that is protected under 
a bilateral tax convention or under the law of a Contracting State will be 
ensured. 
d) The Competent Authority will acknowledge receipt of a taxpayer’s request to 
initiate a mutual agreement procedure w ithin one month from the receipt of the 
request and at the same time inform the Competent Authorities of the other Contracting States involved in the case attaching a copy of the taxpayer’s 
request.  
e) If the Competent Authority believes th at the enterprise has not submitted the 
minimum information necessary for the initiation of a mutual agreement procedure as stated under point 5 (i), it will invite the enterprise within two 
months upon receipt of the request, to pr ovide it with the specific additional 
information it needs. 
f) Contracting States undert ake that the Competent Aut hority will respond to the 
enterprise making the request in one of the following forms:   
(i) if the Competent Authority does not be lieve that profits of the enterprise 
are included, or are likely to be include d, in the profits of an enterprise of 
 
EN 103   EN another Contracting State, it will info rm the enterprise of its doubts and 
invite it to make any further comments; 
(ii) if the request appears to the Co mpetent Authority to be well-founded and 
it can itself arrive at a satisfactory solution, it will inform  the enterprise 
accordingly and make as quickly as possible such adjustments or allow 
such reliefs as are justified; 
(iii) if the request appears to the Co mpetent Authority to be well-founded but 
it is not itself able to ar rive at a satisfactory solu tion, it will inform the 
enterprise that it will endeavour to resolve the case by mutual agreement with the Competent Authority of an y other Contracting State concerned. 
g) If a Competent Authority considers a case to be well founded, it should initiate 
a mutual agreement procedure by informing the Competent Authority of the other Contracting State(s) of its decisi on and attach a copy of the information 
as specified under point 5 (i) of this Code. At the same  time it will inform the 
person invoking the Arbitration Conventi on that it has ini tiated the mutual 
agreement procedure. The Competen t Authority initiating the mutual 
agreement procedure will also inform - on the basis of information available to 
it - the Competent Authority of the othe r Contracting State(s) and the person 
making the request whether the case was presented within the time limits provided for in Article 6 (1) of the Ar bitration Convention and of the starting 
point for the two-year period of Article  7 (1) of the Arb itration Convention.  
6.4 Exchange of position papers 
a) Contracting States undert ake that when a mutual ag reement procedure has been 
initiated, the Competent Authority of th e country in which a tax assessment, 
i.e. a final decision of the tax administ ration on the income, or equivalent has 
been made, or is intended to be made , which contains an adjustment that 
results, or is likely to result, in double  taxation within the meaning of Article 1 
of the Arbitration Convention, will send a position paper to the Competent 
Authorities of the other Contracting St ates involved in th e case setting out: 
(i) the case made by the person making the request; (ii) its view of the merits of the case, e.g. why it believes that double taxation 
has occurred or is likely to occur; 
(iii) how the case might be resolved wi th a view to the elimination of double 
taxation together with a full explanation of the proposal. 
b) The position paper will contain a full justification of the assessment or 
adjustment and will be accompanied by basic documentation supporting the Competent Authority’s position and a list of all other documents used for the 
adjustment. 
c) The position paper will be sent to the Competent Author ities of the other 
Contracting States involved in the case as quickly as possible taking account of 
the complexity of the particular case and no later than four months from the 
latest of the following dates: 
 
EN 104   EN i) the date of the tax assessment notice, i.e. final decision of the tax 
administration on the additional income, or equivalent; 
ii) the date on which the Competent Au thority receives the request and the 
minimum information as stated under point 5 (i). 
d) Contracting States undertake that, wher e a Competent Authority of a country in 
which no tax assessment or equivalent has been made, or is not intended to be 
made , which results, or is likely to result, in double taxation within the 
meaning of Article 1 of the Arbitra tion Convention, e.g. due to a transfer 
pricing adjustment, receives a position paper from another Competent Authority it will respond as quickly as possible taking account of the 
complexity of the particular case and no later than six months after receipt of 
the position paper. 
e) The response should take one of the following two forms: 
(i) if the Competent Authority believes that double taxation has occurred, or 
is likely to occur, and agrees with the remedy proposed in the position paper, it will inform the other Comp etent Authority (ies) accordingly and 
make such adjustments or allow such relief as quickly as possible; 
(ii) if the Competent Authority doe s not believe that double taxation has 
occurred, or is likely to occur, or does not agree with the remedy 
proposed in the position paper, it w ill send a responding position paper to 
the other Competent Authority (ies) setting out its re asons and proposing 
an indicative time scale for dealing with the case taking into account its 
complexity. The proposal will include,  whenever appropriate, a date for a 
face-to-face meeting, which should ta ke place no later than 18 months 
from the latest of the following dates: 
aa) the date of the tax assessment no tice, i.e. final decision of the tax 
administration on the additional income, or equivalent; 
bb) the date on which the Competent Authority receives the request and 
the minimum information as stated under point 5 (i). 
f) Contracting States will further undertake any appropr iate steps to speed up all 
procedures wherever possible. In this  respect, Contracting States should 
envisage to organise regularly, and at least once a year, face-to-face-meetings 
between their Competent Authorities to discuss pending mutual agreement 
procedures (provided that the number of cases justifies such regular meetings). 
6.5 Double tax treaties between Member States 
As far as transfer pricing cases are con cerned, Member States are recommended to 
apply the provisions of points 1 to 3 also to mutual agreement procedures initiated in 
accordance with Article 25 (1) of the OE CD Model Convention on Income and on 
Capital, implemented in the Double ta x treaties between Member States. 
7. Proceedings during the second phase of the Arbitration Convention 
 
EN 105   EN 7.1 List of independent persons  
a) Contracting States commit themselves to inform without any further delay the 
Secretary General of the Council of the European Union of the names of the 
five independent persons of standing, e ligible to become a Member of the 
advisory commission as referred to in  Article 7 (1) of the Arbitration 
Convention and inform, under the same cond itions, of any alteration of the list. 
b) When transmitting the names of their independent persons of standing to the 
Secretary General of the Council of the European Union, Contracting States 
will join a curriculum v itae of those persons, which should, among other 
things, describe their legal, tax and es pecially transfer pr icing experience.  
c) Contracting States may al so indicate on their list t hose independent persons of 
standing who fulfil the requirements to be elected as Chairman. 
d) The Secretary General of the Council will address every year a request to 
Contracting States to c onfirm the names of their independent persons of 
standing and/or give the na mes of their replacements. 
e) The aggregate list of all independent persons of standing will be published on 
the Council’s web-site. 
f) Independent persons of st anding do not have to be nationals of or resident in 
the nominating state but nati onals of a contract ing state and resident within the 
territory to which the Arbi tration Convention applies. 
g) Competent authorities are recommended to draw up an agreed declaration of 
acceptance and a statement of independence for the particular case to be signed by the selected independen t persons of standing. 
7.2 Establishment of the advisory commission  
a) Unless otherwise agreed between th e Contracting States concerned, the 
Contracting State that issued the first tax assessment notice, i.e. final decision of the tax administration on the additiona l income, or equivalent which results, 
or is likely to result, in  double taxation within the m eaning of Article 1 of the 
Arbitration Convention,  takes the initiative for the establishment of the advisory 
commission and arranges for its meeti ngs, in agreement with the other 
Contracting State(s). 
b) Competent Authorities should set up the advisory commission no later than 6 
months following the expiration of the period mentioned in article 7 of the 
Arbitration Convention. Where one Co mpetent Authority does not take the 
necessary actions another Competent Aut hority involved is entitled to take the 
initiative. 
c) The advisory commission will normally consist of two independent persons of 
standing in addition to its Chairman a nd the representatives of the Competent 
Authorities. For triangular cases, where an advisory co mmission is to be set up 
under the multilateral approac h, the Contracting States wi ll have regard to the 
requirements of Article 11(2) of the Arbitration Convention, introducing as 
 
EN 106   EN necessary additional rules of procedur e, to ensure that the advisory 
commission, inclusive of its Chairman, is  able to adopt its opinion by a simple 
majority of its members . 
d) The advisory commission will be assisted by a Secretariat for which the 
facilities will be provided by the Contracting State that initiated the establishment of the advisory commi ssion unless otherwise agreed by the 
Contracting States concerned. For reasons of independence, this Secretariat will function under the supervision of the Chairman of the advisory commission. Members of the Secret ariat will be bound by the secrecy 
provisions as stated in Article 9 (6) of the Arbitration Convention. 
e) The place where the advisory commissi on meets and the place where its opinion 
is to be delivered may be determined in advance by the Competent Authorities of 
the Contracting States concerned. 
f) Contracting States will  provide the advisory commission before its first 
meeting, with all relevant documentation and information and in particular all documents, reports, correspondence and conclusions used during the mutual agreement procedure.  
7.3 Functioning of the advisory commission 
a) A case is considered to be referred to the advisory commission on the date 
when the Chairman confirms that its members have received all relevant documentation and information as specified under point 7.2 f). 
b) The proceedings of the advisory commi ssion will be conducted in the official 
language or languages of the Contracti ng States involved, unless the Competent 
Authorities decide otherwise by mutual agreement, taking into account the 
wishes of the advisory commission. 
c) The advisory commission may request fr om the party from which a statement or 
document emanates to arrange for a translation into the language or languages in 
which the proceedings are conducted. 
d) Whilst respecting the provisions of Ar ticle 10 of the Arbitration Convention, the 
advisory commission may request the Cont racting States and in particular the 
Contracting State that issued the first ta x assessment notice, i.e. final decision of 
the tax administration on the additional income, or equivalent which resulted or may result in double taxation within the m eaning of Article 1, to appear before 
the advisory commission.  
e) The costs of the advisory commission procedure, which will be shared equally 
by the Contracting States concerned, will be the administrative costs of the 
advisory commission and the fees and expenses of the independent persons of standing. 
f) Unless the Competent Authorities of th e Contracting States  concerned agree 
otherwise: 
 
EN 107   EN i) the reimbursement of the expenses of the independent persons of 
standing will be limited to the reimbursement usual for high ranking civil servants of the Contracting State which has taken the initiative to 
establish the advisory commission;  
ii) the fees of the independent persons of standing will be fixed at Euro 1000 
per person per meeting day of the advisory commission, and the Chairman will receive a 10% higher fee than the other independent persons of standing. 
g) Actual payment of the costs of the advisory commission procedure will be 
made by the Contracting State which has taken the initiative to establish the 
advisory commission, unless the Competen t Authorities of the Contracting 
States concerned de cide otherwise. 
7.4 Opinion of the advisory commission 
Contracting States would expect  the opinion to contain:  
a) the names of the members of the advisory commission; b) the request; th e request contains: 
– the names and addresses of the enterprises involved;  
– the Competent Authorities involved;  
– a description of the facts and circumstances of the dispute; 
– a clear statement of what is claimed; 
c) a short summary of the proceedings; d) the arguments and methods on which the decision in the opinion is based; e) the opinion; f) the place where the opinion is delivered; g) the date on which the opinion is delivered; 
h) the signatures of the memb ers of the advisory commission. 
The decision of the Competent Authorities and the opinion of the advisory commission 
will be communicated as follows: 
i) Once the decision has been taken, the Competent Authority to whom the case 
was presented will send a copy of the decision of the Competent Authorities 
and the opinion of the advisory commission to each of the enterprises involved. 
ii) The Competent Authorities of the C ontracting States can agree that the 
decision and the opinion may be published in full, they can also agree to 
publish the decision and the opinion wit hout mentioning the names of the 
 
EN 108   EN enterprises involved and with deletion of any further details that might disclose 
the identity of the enterprises involved. In both cases,  the enterprises' consent is 
required and prior to any publication the enterprises involved must have communicated in writing to the Compet ent Authority to whom the case was 
presented that they do not have objectio ns to publication of the decision and 
the opinion.  
iii) The opinion of the advisory commissi on will be drafted in three (or more in 
case of triangular cases) original copies , a copy of which to be sent to each 
Competent Authority of the Contrac ting States involved and one to be 
transmitted to the Secretariat General of  the Council for archiving. If there is 
agreement on the publication of the opinion, the latter will be rendered public 
in the original language(s) on the website of the Commission.  
8. Tax collection and interest charges during cross border dispute resolution 
procedures  
a) Member States are recommended to take all necessary measures to ensure that 
the suspension of tax collection dur ing cross-border dispute resolution 
procedures under the Arbitration Conve ntion can be obtained by enterprises 
engaged in such procedures, under the same conditions as those engaged in a 
domestic appeals/litiga tion procedure although these measures may imply 
legislative changes in some Member States. It would be appropriate for 
Member States to extend these measures to the cross-border dispute resolution procedures under double tax trea ties between Member States . 
b) Considering that during Mutual Agr eement Procedure nego tiations a taxpayer 
should not be adversely affected by the existence of different approaches on 
interest charges and refunds during the time it takes to run and complete the 
Mutual Agreement Procedure process, Member States are recommended to 
apply one of the following approaches: 
– Tax to be released for collection and re paid without attracting any interest, or 
– Tax to be released for collection and repaid with interest, or 
– Each case to be dealt with on its mer its in terms of charging or repaying 
interest (possibly during the Mutu al Agreement Procedure process). 
9. Accession of new EU Member States  to the Arbitration Convention  
Member States will endeavour to sign and ratify the Accession Convention of new 
EU Member States to the Arbitration Convention, as soon as possible and in any event no later than two years af ter their accession to the EU.  
10. Final provisions  
In order to ensure the even and effective application of the Code, Member States are 
invited to report to the Comm ission on its practical functi oning every two years. On 
the basis of these reports, the Commission intends to report to the Council and may 
propose a review of the provisions of the Code.