Commission staff working document accompanying the Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee on the work of the EU Joint Transfer Pricing 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 convention (90/436/EEC of 23 July 1990) - Final Report of the EU Joint Transfer Pricing Forum on the Interpretation of some Provisions of the Arbitration Convention {COM(2009)472 final} {SEC(2009)1168}
Date: 2009-09-14
Institutions: European Commission
Subjects: EU body, code of conduct, domestic market, report, tax system, transfer pricing

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.9.2009 
SEC(2009)1169 final 

COMMISSION STAFF WORKING DOCUMENT 

Accompanying the 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL,  
THE EUROPEAN PARLIAMENT AND THE EUROPEAN ECONOMIC AND 
SOCIAL COMMITTEE 
on the work of the EU Joint Transfer Pricing 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 convention (90/436/EEC of 23 July 1990) 

Final Report of the EU Joint Transfer Pricing Forum on the Interpretation of some 
Provisions of the Arbitration Convention 

{COM(2009)472 final} 
{SEC(2009)1168} 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

Introduction .................................................................................................................. 4 

JTPF conclusions and recommendations ..................................................................... 5 

Serious penalties........................................................................................................... 5 

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 Arbitration Convention in multilateral or parallel bilateral 

procedures: mandatory arbitration ............................................................................. 12 

2.2.2.5.  Role of the Taxpayer.................................................................................................. 13 

2.3. 

2.4. 

2.5. 

Interest charges during MAP negotiations................................................................. 14 

Deadline for the setting-up of the advisory commission ........................................... 15 

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 independent person of standing .................................................... 18 

2.6. 

2.7. 

Date of admissibility of a case ................................................................................... 19 

Interaction between MAP and judicial appeal ........................................................... 19 

2.7.1. 

JPTF conclusions ....................................................................................................... 21 

3. 

Concluding remarks ................................................................................................... 21 

ANNEXES ............................................................................................................................... 22 

Annex I: Summary table on serious penalties (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 

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Annex IV: Questionnaire on MAPs and related 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 STATEMENT OF INDEPENDENCE.................................. 73 

Annex VIII: Questionnaire on the inter-action between judicial appeals and the AC ............. 74 

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) ........................... 88 

Annex X: JTPF proposal for a revised Code of Conduct......................................................... 97 

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1. 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

1 
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3 

INTRODUCTION 

Under  the  Chairmanship  of  Mr.  Bruno  GIBERT,  partner  of  CMS  Bureau  Francis 
Lefebvre and the Vice-Chairmanship of Mr. Theo Keijzer, Vice-President Tax Policy 
in  Shell  International  BV,  the  Netherlands,  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 JTPF were held in Brussels on 28 June and 
23 October 2007, on 21 February, 5 June, 27 and 28 November 2008. 

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 Arbitration Convention, intra-group services, 
SMEs,  Cost  Contribution  Arrangements  and 
the  monitoring  of  previous 
achievements. 

With  the  knowledge  gained  since  the  “Convention  for  the  elimination  of  double 
taxation  in  connection  with  the  adjustment  of  profits  of  associated  enterprises  the 
“Arbitration  Convention”1  (or  AC),  entered  into  force  in  1995,  the  JTPF  members 
were of the opinion that a common view of interpretation of some provisions could 
usefully  be  addressed.  The 
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 transfer 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 independent persons of standing). 

identified  were: 

specifically 

topics 

The present JTPF work supplements its first report on the same topic on the basis of 
which the Commission had prepared a Communication2 including a Code of Conduct 
that was adopted by the Council3. 

The  objective  of  the  first  report  was  to  ensure  a  more  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. The report also contained a recommendation to 
EU  Member  States  on  the  suspension  of  tax  collection  during  cross-border  dispute 
resolution procedures. 

This document reports on the achievements of the JTPF related to the interpretation 
of some provisions of the Arbitration Convention. 

Once the report is agreed by the JTPF members 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 report, the agreed report on penalties and a 
proposal for a revised Code of Conduct on the Arbitration Convention. At a second 

OJ L/1990/225 of 20/08/1990 – Convention 90/436/EEC 
OJ C/2004/122 of 30/04/2004 p.45 
OJ C/2006/176 of 28/07/2006 p.8 

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stage  Member  States  should  at  the  Council  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 Arbitration Convention states: 

9. 

10. 

11. 

"The Competent Authority of a Contracting State shall not be obliged to initiate the 
mutual  agreement  procedure  or  to  set  up  the  advisory  commission  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". 

Article 8 (1) is supplemented by Individual Declarations made by each MS where it 
is explained what they considered to be a serious penalty. 

This topic was discussed on several occasions 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 situation at the moment under the Arbitration Convention where 
27 different definitions of a serious penalty exist 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 disadvantaged from different definitions within 
the EU. The JTPF will seek to define in which cases a penalty should be considered 
as serious". 

Subsequently  MS  were  invited  to  inform  the  JTPF  on  the  number  of  cases  where 
access to the Arbitration Convention was denied 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  members  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 described penalties that should probably not be considered 
as "serious" within the context of Article 8. 

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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 Forum would recommend a liberal interpretation of 
the provision as follows. 

JTPF recommendation: 

As  Article  8.1  provides  for  flexibility  as  regards  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 the JTPF invites MS to clarify or revise their 
unilateral statements in Annex of the Arbitration 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. 

14. 

15. 

16. 

17. 

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  capitalization 
cases. 

In order to assess the current position in the EU, MS completed a questionnaire (see 
annex  4.2)  to  answer  whether  or  not  they  consider  a  case  of  "thin  capitalization" 
under several scenarios to be solvable under the Arbitration Convention. 

From the table the JTPF concluded unanimously that an adjustment arising in respect 
of the rate of interest fell within the scope of the Arbitration 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. 

Differing views were also expressed on the inclusion of adjustment to profits arising 
as a result of the application of anti-abuse rules. 

Consequently  the  JTPF  focused  the  debate  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  clarifying  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 Arbitration Convention related 
to financial transactions: 

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JTPF recommendation:4 

The  Arbitration  Convention  (AC)  makes  clear  reference  to  profits  arising  from 
commercial  and  financial  relations  but  does  not  seek  to  differentiate  between  these 
specific  profits  types,  to  thus  narrow  the  scope  of  the  AC.  The  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  adjustments  arising  from  financial  relations 
including  a  loan  and  its  terms  and  based  on  the  arm's  length  principle  are  within  the 
Convention.
scope 

Arbitration 

of 

Reservations on the scope of the AC: Thin Capitalisation 

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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 does 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 adjustment 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 capitalization 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  within  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  invoked  to  solve  double  taxation  arising  from  adjustments  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 

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2.2.2.  Transfer pricing triangular cases 

18. 

19. 

The Forum studied the potential of applying 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, 29th April 2008 and 8th July, 2008 and sent 
its report to the JPTF in August 2008. The report was fully endorsed by the Forum 
during its November 2008 meeting. 

This  part  of  the  report  provides  the  conclusions,  guidelines  and  recommendations 
arrived  at  so  far  on  how  to  approach  and  resolve  potential  double  taxation  in  so-
called  triangular  transfer  pricing  cases  (hereafter  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  prescriptive  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 definition which should be neither too broad nor 
too narrow. 

21. 

The agreed definition is 

A triangular case is a case where two states in a MAP cannot fully resolve any double 
taxation arising in a transfer pricing case when applying the ALP because an associated 
enterprise  -  as  defined  in  the  Arbitration  Convention  -  situated  in  a  third  state  and 
identified  by  both  EU  Competent  Authorities  (evidence  based  on  the  comparability 
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 relations and recognised 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  concerned  are  situated  within  the  EU 

(hereafter referred to as EU triangular cases); 

•  cases where the associated  company identified as being the source of non arm’s 
length  results  in  a  chain  of  relevant  transactions  or  commercial  /  financial 
relations  is  situated  outside  the  EU  (hereafter  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. 

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23. 

The  present  report  only  addresses  EU  triangular  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  participates  directly  or  indirectly  in  the 
management, control or capital of an enterprise of another Contracting State,  

or 

(b) the same persons participate directly or indirectly in the management, control or 
capital  of  an  enterprise  of  one  Contracting  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 Arbitration Convention provides:  

“1. Where an enterprise considers 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 enterprise or in which its permanent establishment is situated. 
The case must be presented within three years of the first notification of the action 
which results or is likely to result in double taxation within the 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  Arbitration  Convention  in  which  it  is  stated 
that: 

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“CONSIDERING  the  importance  attached  to  the  elimination  of  double  taxation  in 
connection with the adjustment of profits of associated enterprises (emphasis added), 
…”. 

28. 

Article 6 read in conjunction 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 interpretation of its provisions but as 
the supreme goal is the elimination of the double taxation, 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  Arbitration  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 taxation in connection with the adjustment of 
profits  of  associated  enterprises.  It  is  open  to  MS  to  interpret  the  provisions  of  the 
Arbitration Convention in a way consistent with the aim of eliminating double taxation. 
In  accordance  with  that  approach  Member  States  recognise  the  principle  that  all  EU 
transactions  involved  in  EU  triangular  cases  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 deal with triangular cases 

31. 

The  JTPF  identified  three  options  to  deal  with  EU  triangular  cases  under  the 
Arbitration Convention.  

(1) 

(2) 

Competent Authorities can decide to take a multilateral approach (immediate 
and full participation of all Competent Authorities concerned); or 

Competent Authorities can decide to start 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 bilateral procedure being the member states 
having identified (based on the comparability analysis including a functional 

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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 length 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 (possibly three or more) and should invite the respective 
third MS CA(s) to participate as (an) observer(s) to the MAP discussions. 

32. 

33. 

34. 

From the beginning of the procedure, the Competent Authorities will agree which of 
the three approaches will be applicable. 

The Forum recognises that in a given situation (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.  

The JTPF noted that the monitoring of the Code of Conduct is an ongoing exercise. 
However, other than recommending that the 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  Competent  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 approach. To that extent all information should 
be shared with the other EU Competent Authority (ies) through for example Exchange 
of  Information.  The  other  EU  Competent  Authority  should  be  invited  to  acknowledge 
the actual or possible involvement 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) observer(s) during the first stage 
of the Arbitration Convention procedure (MAP). The status of the observer may then 
shift to that of stakeholder(s) depending on the development of the discussions and 
evidence presented. If that (those) third member State(s) want(s) to participate in the 
proceedings  of  the  second  stage  (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 preparation 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. 

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36. 

37. 

38. 

39. 

If the Third Member State(s) remain(s) throughout the discussions as (an) observer(s) 
only, that shall not have any consequence on the application of the provisions of the 
Arbitration Convention (e.g. timing issues and procedural issues). 

Attendance in the role of observer does not bind the observer(s) Member State(s) to 
the final outcome of the Arbitration Convention procedure. 

Any exchange of information must comply with the normal legal and administrative 
requirements and procedures. 

The presence of the observer(s) will provide a wider context to the transaction being 
examined.  However  any  provision  of  the  Arbitration  Convention  would  not  be 
applicable  to  (an)  Observer  Member  State(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  Convention  in  multilateral  or  parallel  bilateral 

procedures: mandatory arbitration 

40. 

41. 

42. 

43. 

The  third  state(s)  can  only  be  part  of  the  procedures  related  to  the  second  stage  if 
it(they)  has(have)  decided  to  become  (a)  Contracting  State(s)  of  the  mutual 
agreement procedure. 

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. 

If  an  advisory  commission  is  to  be  set  up  under  the  multilateral  approach,  the 
Contracting  States  will  have  regard  to  the  requirements  of  Article11(2)  of  the 
Arbitration  Convention,  introducing  as  necessary  additional  rules  of  procedure,  to 
ensure that the advisory commission, inclusive of its Chairman, is  able to adopt its 
opinion by a simple majority of its members. 

If the Competent Authorities decide to start up more than one bilateral procedure in 
parallel,  advisory  commissions  for  each  separate  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  establishing  advisory  commissions  -(more  independent 
persons  of  standing,  secretarial  services  for  each  advisory  commission,  several 
Chairmen etc, …). The JTPF felt that the bilateral parallel procedures would result in 
inefficiencies  possibly  leading  to  the  non  elimination  of  the  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 

12 

   EN 

 
 
JTPF Recommendation:  

Considering the pros and cons of the above 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  possible  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 discussions either as a Contracting State to the 
observer(s).
initial 

Convention 

Arbitration 

application 

(an) 

or 

as 

2.2.2.5.  Role of the Taxpayer 

45. 

46. 

47. 

48. 

The JTPF recognises the key role of the taxpayer in EU triangular cases. 

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  stakeholders  (including  the  Competent 
Authorities). 

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 providing additional information requested 
and points of factual clarification. 

In this context it must also be added that it is primarily for the taxpayer to identify 
the  commercial/financial  relationship(s)  resulting  in  double  taxation.  The  taxpayer 
needs to provide a comprehensive analysis of all relevant facts and present evidence 
based  reasons  as  to  which  contracting  States  should  start  the  appropriate  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) third MS(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 resolution but also guard against  the non  resolution of double tax issues by 
virtue of differing Member States` procedural deadlines. 

EN 

13 

   EN 

 
 
 
 
 
 
 
 
2.3. 

Interest charges during MAP negotiations 

49. 

The  Forum  considered  the  issue  of  interest  charges  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 taxpayer or to sanction 

a fault from the taxpayer; 

•  the length of time the Arbitration Convention or MAP procedure takes is largely 

due to the actions of the tax administrations not the taxpayer; 

•  two periods for interest charged should be distinguished: one covering the period 
before the adjustment for which the tax administration 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 (where the taxpayer is requested to pay 
interest  because  the  tax  administrations  try  to  determine  between  themselves 
where the tax should be paid). The JTPF discussions 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 based on chapter IV, 4.64 to 4.66 of the 

OECD Guidelines; 

In  February  2008,  tax  administrations  were  asked  to  answer  the  question  whether 
their tax system does foresee the reimbursement 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.  

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. 

From  the  table  it  can  be  also  concluded  that  MS  have  supplemented  their 
administrative  practice  by  suspending  tax  collection  during  the  MAP  process.  MS 
report that at the conclusion of the MAP process the suspended tax is dealt with in 
the following ways: 

•  tax released for collection or repaid without attracting any interest 

51. 

52. 

53. 

EN 

14 

   EN 

 
•  tax released for collection or repayment with interest 

•  each case dealt on its merits in terms 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 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 MAP process. 

JTPF recommendation 

JTPF recommends that MS should apply one of the following approaches: 

- Tax to be released for collection and repaid 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. 

55. 

Deadline for the setting-up of the advisory commission 

This issue is ruled by two articles of the Arbitration Convention: 

Article 7 (1) says: "If the Competent Authorities concerned fail to reach an agreement 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 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  connection  with  the  adjustment  of  profits  of 
associated enterprises provides for the following clarifications: 

•  Under  point  4.2  "Unless  otherwise  agreed  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  taxation  within  the  meaning  of 
Article 1 of the Arbitration Convention, takes the initiative for the establishment 
of the advisory commission and arranges for its meetings, in agreement with the 
other Contracting State". 

EN 

15 

   EN 

 
 
 
 
 
 
57. 

58. 

59. 

•  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 information as specified under point 4.2 e)".  

From the above it was concluded that no clear deadline had been established for the 
setting-up of an advisory commission. 

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. 

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 
following 
recommendation: 

to  a  consensus 

to  suggest 

the 

JTPF conclusion: 

The  JTPF  considers  the  absence  of  a  clear  deadline  for  the  setting-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  the  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 necessary 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. 

61. 

62. 

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.  

Annex 4.6 encloses the updated list at the beginning of June 2008. 

Several members, based on their experience with the second phase of the Arbitration 
Convention, emphasised the need to keep those 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 Article 7 (1) shall consist of, in addition to 
its Chairman:  

EN 

16 

   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  standing  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  Competent  Authorities  may  object  to  the 
appointment  of  any  particular  independent  person  of  standing  in  any  circumstance 
agreed  in  advance  between  the  Competent  Authorities  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 holding 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  standing  shall  consist  of  all  the  independent 
persons  nominated  by  the  Contracting  States.  For  this  purpose  each  Contracting 
State  shall  nominate  five  persons  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  list  referred  to  in  the  first  subparagraph;  they  shall  inform  the 
Secretary-General  of  the  Council  of  the  European  Communities  thereof  without 
delay.  

5. The representatives and independent persons of standing appointed in accordance 
with paragraph 1 shall elect a Chairman from 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  appointment  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 appointment to the highest judicial offices in 
his country or be a jurisconsult of recognized competence.  

6. The members of the advisory commission shall 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  secrecy  obligations.  They  shall,  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 once cases are referred to it. 

EN 

17 

   EN 

 
64. 

65. 

66. 

67. 

68. 

The  Code  of  conduct  for  the  effective  implementation  of  the  Convention  on  the 
elimination  of  double  taxation  in  connection  with  the  adjustment  of  profits  of 
associated  enterprises  does  not  provide  additional  information  as  regards  the 
competence or independence requirements for the independent persons of standing. 

From the above provisions it can be concluded 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 considered again when appointing a person of standing to the 
advisory commission. 

The Forum considered developing specific rules that would facilitate the assessment 
of  the  competence  of  the  independent  persons  of  standing.  However,  the  members, 
by  consensus,  agreed  to  examine  this  question  at  a  later  stage:  when  a  few  more 
cases will have been sent to advisory commissions. 

The  JTPF  also  agreed  that  the  absence  of  criteria  to  be  applied  for  considering  a 
person  of  standing  to  an  advisory  commission  as  independent  and  competent  can 
lead to problems delaying the setting-up of an advisory commission. 

Based  on  the  experience  gained  by  other  organizations  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 declaration of  acceptance and a  statement of independence for 
the particular case.   

2.5.3.  Nationality of the independent person of standing 

69. 

Some  Members  wanted  to  clarify  whether  a  MS  could  nominate  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  have  to  be  nationals  of  or 
resident in the nominating state but nationals of a Contracting State and resident within 
the territory to which the Convention applies. 

EN 

18 

   EN 

 
 
 
 
 
 
 
2.6. 

Date of admissibility of a case 

71. 

The  issue  of  the  interpretation  of  the  provisions  of  the  Arbitration  Convention  as 
regards  the  question  to  know  from  which  date  a  case  is  admissible/covered  by  the 
Arbitration Convention once a country 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 the 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  Arbitration  Convention  when  the  request  is 
timely  presented  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.   

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 positions so that taxpayers can better understand the options 
open to them to resolve double taxation. However, not all MSs' positions are clear. 
The Forum has therefore decided first to clarify the status quo and 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 Arbitration Convention states: 

"1. If the Competent Authorities concerned fail to reach an agreement 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 the double taxation in question.  

Enterprises may have recourse to the remedies 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 

19 

   EN 

 
 
 
2.  The  submission  of  the  case  to  the  advisory  commission  shall  not  prevent  a 
Contracting State from initiating or continuing judicial proceedings or proceedings 
for administrative penalties in relation to the same matters. 

3. Where  the domestic  law  of a  Contracting 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  associated  enterprise  of  that  State  has 
allowed the time provided 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 other than those referred to in Article 6. 

4. The Competent Authorities may by mutual agreement and with the agreement of 
the associated enterprises concerned waive the time limits referred to in paragraph 
1.  

5. In so far as the provisions of paragraphs 1 to 4 are not applied, 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  unilateral  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 

20 

   EN 

 
2.7.1. 

JPTF conclusions 

77. 

78. 

3. 

79. 

80. 

81. 

The JTPF decided to attempt to clarify Member 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 sent a questionnaire in order to assess the 
situation prevailing in each Member State. 

The JTPF concluded that the answers in annex 4.8 clarify the situation prevailing in 
each Member State. 

CONCLUDING REMARKS 

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.  

It  is  also  noted  that  further  work  is  required  on  what  if  any  guidance  on  non  EU 
triangular cases is appropriate. 

The  JTPF  invites  the  Commission,  Member  States  and  the  Council  to  take  the 
necessary actions to implement its conclusions and recommendations. 

EN 

21 

   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 Arbitration Convention was ever 
denied  to  a  taxpayer  because  of  the  existence  of  a  serious  penalty  (Article  8  of  the 
Convention) as defined by the relevant Member States. 

Summary table: 

This  table  derived  by  Secretariat  from  Member  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 

Belgium 

Bulgaria 

Cyprus 

Czech 
Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Italy 

NR 

NR 

NR 

NR 

X 

NR 

X 

X 

NR 

NR 

NR 

X 

NR 

X 

X 

X 

NR 

X 

No request received so far 
where a taxpayer has faced 
a serious penalty. 

MAP under AC suspended 
until serious penalty is 
final. Two cases so far. 

No request received so far 
where a taxpayer has faced 
a serious penalty. 

No request received so far 
where a taxpayer has faced 

EN 

22 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NR 

NR 

NR 

NR 

NR 

NR 

X 

Ireland 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovak 
Republic 

Slovenia 

Spain 

Sweden 

United 
Kingdom 

X 

NR 

NR 

X 

NR 

X 

X 

X 

NR 

NR 

NR 

X 

X 

a serious penalty. 

No request received so far 
where a taxpayer has faced 
a serious penalty 

No request received so far 
where a taxpayer has faced 
a serious penalty. 

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 

23 

   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 capitalization" to be solvable under the Arbitration Convention. The 
JTPF considers that this analysis will be useful to both taxpayers and tax administrations. 

Different tax administrations have different rules used to look at debt arrangements between 
associated  persons.  In  some  countries,  "normal"  transfer  pricing  rules  apply.  In  some 
countries, there are special rules. Some countries have both. But all rules 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  administrations  typically  mean  looking  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  (borrowing capacity)  and also some tax administrations look at 
the amount of debt which would have existed (borrowing capacity and attitude to debt and/or 
risk.). 

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: 

•  reduces the rate of interest paid on an inter-company loan (Q1) 

•  reduces  the  amount  of  a  loan  on  which  interest  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  debt  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  differ  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 and amendments after the October meeting 

Member 
State 

Question 1 

Question 2 

Question3  

Question 4 

Question 5 

Austria 

YES 

YES 

YES 

YES 

YES 

EN 

24 

   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 

NA 

NA 

No specific 
legislation 

No specific 
legislation 

No specific legislation 

Cyprus 

Yes 

Yes 

Yes 

Not relevant. No thin 
cap rules in Cyprus. 
Normal transfer pricing 
rules apply. On a case 
by case 

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

No. In case of 
Q4 where the 
adjustment is 
solely based on 
a thin cap ratio 
it shall not be 
accepted under 
the AC. 

Yes in general 

NA 

NA 

Generally no  

Generally no 

Czech 
Republic 

Denmark 

Estonia 

YES 

YES 

YES 

YES 

YES 

YES 

Finland 

YES 

YES 

YES 

YES 

There are no thin 
capitalisation rules in 
Estonia, "normal" 
transfer pricing rules 
apply 

No. There are no thin 
cap ratio rules in 
Finland 

NO 

NO 

Cases (1-3) 
will be 
accepted into 
the AC if we 
were being 
asked to give a 

EN 

25 

   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 

Greece 

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 

No specific 
rules 

No specific 
rules 

No specific 
rules 

No specific rules 

No specific 
rules 

In  reply  to  the 
Thin 
Capitalization 
Questionnaire 
the 
regarding 
implementation 
of  Arbitration 
Convention, 
we  would  like 
to  inform  you 
that  the  Greek 
legislation 
tax 
has  no  special 
thin 
capitalization 
rules  and  each 
case  of 
loan 
agreement 
between 
associated 
enterprises 

is 

EN 

26 

   EN 

 
to 
arm’s 

examined, 
according 
the 
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 

27 

   EN 

 
 
Italy 

Yes, of course. 
This is a 
transfer pricing 
issue. 

not apply 
such rules 

not apply 
such rules 

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 
the 
for 
pricing  of  the 
loan  (question 
n.1),  of  course 
we 
would 
accept  a  case 
the  AC 
into 
the 
also 
if 
actions 
had 
been  taken  by 
another 
tax 
administration. 

As 
the 
for 
amount  of  the 
loan  (question 
n.  2-3-4),  we 
not 
would 
to 
accept 
discuss 
the 
double  taxation 
issue 
the 
in 
framework  of 
the  Arbitration 
Convention. 

is 

Reason: It does 
not  seem  that 
there 
a 
common 
agreement 
EU 
among 
Member  States 
as  to  the  fact 
the  ALP 
that 
may  be  applied 
to 
cap 
thin 
domestic  rules. 
also 
Besides, 
among 
those 
considering 
thin  cap  rules 
in  the  context 
transfer 
of 
rules, 
pricing 
is 
there 
disagreement 

EN 

28 

   EN 

 
the 

as 
to 
identification 
of  the  cases  in 
which  thin  cap 
were 
rules 
applied  on  the 
the 
basis  of 
length 
arm’s 
or 
principle 
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 

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 

Ireland 

Yes  

No specific 
legislation 

No specific 
legislation 

No specific legislation 

EN 

29 

   EN 

 
Latvia 

yes 

No 

No 

Lithuania 

Yes 

No specific 
rules 

No specific 
rules 

Luxembourg 

Malta 

YES 

YES 

YES 

YES 

YES 

YES 

No 

No 

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, 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 

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 

the arm's 
length profit. 

Yes on a case 
by case under 
MAP 

Case by case 
under MAP 

YES 

YES 

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 

30 

   EN 

 
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 

Portugal 

YES 

No. 

No. 

No. 

The thin 
capitalization 
rules are not 
applicable to 
cases that 
involve UE 
entities  

The thin 
capitalization 
rules are not 
applicable to 
cases that 
involve UE 
entities 

The thin capitalization 
rules are not applicable to 
cases that involve UE 
entities 

the basis of 
article 25, 
paragraph 3 of 
the OECD 
MTC 

 in case of 
corresponding 
adjustment, 
the action of 
Polish 
administration 
would be the 
same, i.e. 
only cases 
concerning 
interest. 

-  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. 

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. 

Romania 

Yes, in general.  

interest 
are 

The 
expenses 
entirely 
in 
deductible 
case 
the  debt 
equity  ratio  is 
equal  or 
less 
then  3.  The 
debt 
equity 
ratio  represents 
ration 
the 

EN 

31 

   EN 

 
 
 
 
 
 
tax 

the 

between 
borrowed 
capital  (with  a 
reimbursement 
period over one 
year)  and  the 
registered 
capital,  as  a 
mean  of  values 
existing  at  the 
beginning  and 
the 
end 
of 
for 
period 
the 
which 
profit 
is 
calculated.  The 
borrowed 
capital 
the 
is 
total amount of 
and 
credits 
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 
In 
conditions. 
of 
case 
bilateral 
or 
multilateral  tax 
agreement, 
their provisions 
are  superior  to 
the  provisions 
of  the  internal 
legislation. 

EN 

32 

   EN 

 
Slovak 
Republic 

Slovenia 

Yes 

No specific 
rules 

No specific 
rules 

No specific rules 

On a case by 
case 

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 

YES 

Assuming 
there is no 
penalty 

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 capitalization in Bulgaria 

According  to  the  Corporate  Income  Taxation  Act  (CITA)  interest  expenses  incurred  by 
companies  in  Bulgaria  are  regulated  for  taxation  purposes.  Art.  43,  para.  1  of  the  Act 
stipulates  that  interest  expenses,  calculated  as  shown  below,  shall  not  be  recognized  for  tax 
purposes in the year in which they are accounted for: 

UIE = IE – (IR + 0,75 x FRPI), where: 

UIE are the unrecognized interest expenses; 

IE are the interest expenses determined 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 any financial (interest) 
expenses in connection with borrowed capital financing. The interest expenses, however, shall 
not include: 

EN 

33 

   EN 

 
 
 
1. interest under financial leasing or bank credit, except where the parties to the transaction 
are related parties, or the leasing, 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 for 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 interest expenses have been incurred as a result 
of  controlled  or  uncontrolled  transactions.  In  other  words,  this  rule  is  in  place  even  if  all 
interest expenses have been incurred 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 transfer pricing rules now in force. Under CITA 
the  amount  of  loans  granted  between  associated  parties  is  not  subject  to  limitation  for  the 
purposes of transfer pricing.  

Taking account of the above Bulgaria may only reduce (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 first 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 

34 

   EN 

 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
non-recognized  portion  of  a  granted  loan,  which  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 taken 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 provided 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 associated enterprises is deductible only up to an 
amount calculated on the basis of the annual average of the average effective rates applied by 
credit  institutions  for  variable-rate  business  loans  with  an  initial  duration  of  more  than  two 
years. If a higher rate is applied, 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 the group to which it belongs. 

These provisions apply to all interest due to directly or indirectly associated enterprises (with 
the exception of interest owed by credit institutions, by corporate 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-capitalised on the basis of the three aforementioned 
ratios and has not presented any evidence to the contrary, the portion of the interest payment 
due  to  associated  enterprises  that  exceeds  the  highest  of  these  three  ratios  may  not  be 
deducted in the financial year in question unless it is less than €150 000. The portion may be 
carried forward for deduction in subsequent financial years, subject to certain limitations and, 
where appropriate, with a 5% reduction. 

EN 

35 

   EN 

 
2.  Can  a  mutual  agreement  procedure  be  requested  under  the  European  Arbitration 
Convention for an adjustment on the basis 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 institution or body under similar conditions.  

This rule is consistent with the arm's length principle as set out in Article 4 of the European 
Arbitration Convention. It is therefore possible to initiate a mutual agreement procedure under 
the  Convention  for  an  adjustment  under  Article  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  immediately  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,  subject  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  agreement  procedure  under  the  European  Arbitration 
Convention. 

For  adjustments  made  by  another  State,  it  is  difficult  to  say  what  the  situation  would  be 
because  each  case  would  require  an  examination  of  the  under-capitalisation  legislation  in 
force in that State. 

Nevertheless, the interest rate or the debt incurred by an enterprise vis-à-vis another enterprise 
that is part of the same group may be challenged by initiating a mutual agreement procedure 
as provided for under the European Arbitration Convention only if the legislation in force in 
the State in question is based 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 capitalization" to be solvable under the Arbitration Convention. The 
JTPF considers that this analysis will be useful to both taxpayers and tax administrations. 

Different tax administrations have different rules used to look at debt arrangements between 
associated  persons.  In  some  countries,  "normal"  transfer  pricing  rules  apply.  In  some 
countries, there are special rules. Some countries have both. But all rules 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 

36 

   EN 

 
By  "thin  capitalization"  tax  administrations  typically  mean  looking  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  (borrowing capacity)  and also some tax administrations look at 
the amount of debt which would have 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 paid on an inter-company loan? 

2. 

3. 

4. 

5. 

Ireland  does  not  have  legislation  that  reduces  the  rate  on  interest  on 
Response: 
inter-company loans for tax purposes. Ireland does have legislation 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  represents  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 Arbitration Convention is applicable. 

reduces  the  amount  of  a  loan  on  which  interest  is  paid  because  of  the  limited 
borrowing capacity of the debtor? 

Response: 

Ireland does not have this type of thin capitalization rule. 

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. 

reduces the amount of a loan on which interest is paid because the debt exceeds 
a thin cap ratio 

Response: 

Ireland does not have this type of thin capitalization rule. 

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  Arbitration  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 thin capitalization rules of the other Member State. 

Netherlands: reasons to say no 

•  A case will not be accepted into the 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 

37 

   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 lack of consensus between member states, these 
cases should in our view not be accepted into the AC. 

•  A case will not be accepted into the 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  examine  the  practice  (jurisprudence,  case  law)  of 
European Court of Justice in cases regarding thin 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  and  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  Capitalization.  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 increase the taxable income of company by interest 
payments: 

(a) 

(b) 

which exceed the amount of interest payments calculated by applying previous 
month  short-term  credit  rate  in  the  credit  institutions  specified  by  the  Central 
Statistics Bureau for the taxation period and multiplied by 1.2; 

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  four  times  the  amount  of  own  capital 
reflected in the annual report of taxpayer, which is reduced by the conversion 
of  long-term  deposits  into  reserves  and  other  reserves,  which  have  not  been 
created as a result of the division of profit. 

Since each member state has its own rules and methods applicable to thin capitalization, the 
extension  of  Arbitration  Convention  on  thin  capitalization  could  be  arranged  by  coming  to 
mutual  agreement  on  the  approach  which  could  be  acceptable  for  all  member  states. 
Considering  the  OECD  commentaries  on  the  articles  of  Model  Tax  Convention,  in  case  of 
thin capitalization to avoid double taxation member states should follow the principles set in 
Article 9 Paragraph 1 or Article 11 Paragraph 6.  

EN 

38 

   EN 

 
At  this  moment,  Latvia  is  not  ready  to  give  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 Capitalisation. Malta  would,  however, 
accept  a  case  into  the  Arbitration  Convention  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 borrowing 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  Arbitration  Convention  if  the  actions mentioned 
above  had  been  taken  by  another  tax  administration  and Malta  was  asked  to  give  a 
corresponding adjustment. 

Poland: 

Issue  of  thin  capitalization  is  recognized  in  Polish  tax  regulations  as  capitalization  by  debt. 
Interest paid on such debt agreements are treated differently than dividends. Dividends shall 
not be considered the revenue earning costs in contrary to interest. 

If  debt  arrangements  are  between  associated  companies  and  it  will  result  in  profit  shifting 
between those companies, Polish tax administration will apply "normal" transfer pricing rules. 
However, those rules will include only cases relevant to level of interest paid on the loan. 

Pursuant to specific Polish rules, in case of interest adjustment, tax administration is bound to 
use  the  lowest  interest  rate  -  based  on  arm's  length  rules.  Thus,  making  corresponding 
adjustment by Polish tax administration, those 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 rules are considered a specific anti-abuse measure to counter practices 
related to excessive debt and are restricted only to related entities resident in third countries. 

In what concerns abusive practices concerning interest paid on loans by resident companies to 
EU related entities, namely where the loan in full or partly should be in substance qualified 

EN 

39 

   EN 

 
fully or partly as equity the tax 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 arbitration 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  measures. 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  pricing  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  account  each  case  of  possible  double  taxation  at  least  under  the 
Article 25 of pertinent double tax treaty and consider possibility to solve the cases under the 
Arbitration Convention on a case by case basis. 

Slovenia: 

Thin  capitalisation  is  treated  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 - banks and insurance undertakings, received from 
a shareholder or partner who at any point in the tax period directly or indirectly holds no less 
than 25% of shares or holdings in the capital or voting rights of the taxable person, provided 
that the loans in question exceed, at any point in the tax period, four times the amount of the 
holding  of  the  shareholder  or  partner  in  the  taxable  person's  capital  (hereinafter:  surplus  of 
loans), established with regard to the amount and duration of the surplus of loans in the tax 
period,  shall  not  be  recognized  as  expenditure,  unless  the  taxable  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 subject in the above paragraph involve also loans 
extended  by  third  parties,  including  loans  extended  by  banks,  which  are  guaranteed  by  the 
shareholder  or  partner  in  question,  and/or  when  the  loans  are  obtained  in  connection  with  a 
deposit held in that bank by the shareholder or partner in question. 

The amount held by a shareholder or partner in the capital of the recipient of a loan shall be 
determined for the tax period as an average on the basis of the balance of paid-in capital, net 
profit brought forward, and reserves as at the last day of each month in the tax period. 

Nevertheless,  interest  not  recognized  as  an  expenditure  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 person, provided that at any point in the tax period 
concerned those loans exceed: 

In the first year after the date of entry into force of the Corporate Income Tax Act, a 

EN 

40 

   EN 

 
factor of eight; 

In the second, third and fourth year, a factor of six; 

And in the fifth year, a factor of five times the amount of this partner's holding in the taxable 
person's capital, established 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 Corporate Income Tax Act and the Transfer pricing 
Provision are following the Transfer pricing Guidelines 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  interest  is  paid  because  of  the  limited  borrowing 

capacity of the debtor 

–  If  made  by  the  Swedish  tax  administration:  Not  applicable  as  the  Swedish  tax 

administration cannot make this kind of adjustments. 

–  If made by foreign tax administration: 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  debt  would  not  have 

existed for reasons unrelated to borrowing capacity. 

–  If  made  by  the  Swedish  tax  administration:  Not  applicable  as  the  Swedish  tax 

administration cannot make this kind of adjustments. 

–  If made by foreign tax administration: 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 the 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  administration:  Not  applicable  as  the  Swedish  tax 

administration cannot make this kind of adjustments. 

–  If made by foreign tax administration: Even 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 

41 

   EN 

 
approach. The Swedish opinion is that thin cap approaches is not in accordance 
with  the  arm’s  length  principle.  Consequently,  Sweden  is  unlikely  to  accept 
adjustments  made  by  a  foreign  tax  administration  due  to  thin  cap  rules  in  the 
foreign jurisdiction. 

Sweden wants to clarify that they do not have any 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  amount  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  components,  such  as  that  related  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 the answer to the fourth 
question  can  be  “Yes”  because,  as  we  have  explained,  we  would  only  accept  into  the 
Arbitration Convention cases involving 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  Convention  a  case  where  an  adjustment  had  been 
made  by  reference  to  a  ratio,  but  only  to  the  extent  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 

42 

   EN 

 
ANNEX III: SCOPE OF THE AC QUESTIONNAIRE 

All  MS  tax  administrations'  members  were  invited  during  June  2008  meeting  to  answer 
whether they consider that the arbitration convention can be applied to thin cap issues. 

The answers were the following: 

Member State 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 
France 
Germany 
Greece 

Hungary 
Italy 
Ireland 
Latvia 
Lithuania 
Luxembourg 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovak Republic 
Slovenia 
Spain 
Sweden 
United Kingdom 

Preliminary Answer 
YES if based on the application of the arm's length principle 
In principle YES 

YES if based on the application of the arm's length principle 
Yes if related to interest rate 
YES 
YES 
YES in principle 
YES if based on the application of the arm's length principle 
YES if based on the application of the arm's length principle 
In principle YES, if based on the application of the arm’s length principle, 
but there is no common thin capitalisation definition 
NO because they have thin cap rules 
NO 
In principle YES but Ireland has no thin capitalization legislation 
In principle YES if based on the application of the arm's length principle 
In principle YES 
? 
YES if based on the application of the arm's length principle 
NO 
Yes only if related to interests 
NO 

Yes if based on the application of the arm´s legth principle  
YES in principle but limited to the interests 
YES because based on article 4 of the AC 
In principle YES but there is no common thin cap definition 
YES 

EN 

43 

   EN 

 
 
 
 
ANNEX  IV:  QUESTIONNAIRE  ON  MAPS  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  provisions  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 MAP 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 

Belgium 

YES 

YES 

Interest for late payment 

In case of late payment of tax, in principle an interest is due for the duration 
of  the  period  of  non-payment,  calculated  at  the  statutory  interest  rate  (art. 
414,  BITC  92).  However,  in  case  of  appeal  against  the  tax  assessment,  the 
interest is only due for the first 6 months, but will resume at the end of the 
month  in  which  the  formal  notification  of  the  decision  was  sent  to  the 
taxpayer. 

Moratorium interest 

According  to  article  418,  BITC  92,  moratorium  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 Arbitration convention 

EN 

44 

   EN 

 
 
 
 
 
 
The reimbursement of taxes as a result of a decision of the competent 
authorities at the end of the mutual agreement procedure or arbitration 
procedure give rise to moratorium interest as stipulated un article 418, BITC, 
92 (circular AFZ/INTERN IB/98-0170 of July 7th, 2000) 

Bulgaria 

NO 

Bulgarian  domestic  law  does  not  provide  for  any  specific  rules  for 
reimbursement  of  taxes  to  a  taxpayer  in  the  case  of  a  MAP  being  initiated 
under  the  Arbitration  Convention.  No  special  rules  are  applicable  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 provided for in the Tax 
and  Social  Procedure  Code  (TSPC)  concerning  reimbursement  of  taxes 
apply.  According  to  the  TSPC  the  revenue  administration  shell  reimburse 
interests  incurred  on  taxes  to  be  refunded  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 name of the revenue administration.  

Taking into consideration the above said if taxes are paid by a taxpayer 
on the grounds of his tax return (as a result of a self-assessment process) 
no  interests  are  chargeable  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 analyses and political decision 

Cyprus 

Czech Republic 

YES 

Generally no. 

The  interest  is  paid  for  late  payment.  The  only  case  when  it  is  possible  to 
tax 
refund 
administration’s 
tax 
assessment after tax audit is reduced by remedies or MAP) 

incorrect  assessment  (e.g.  when 

to 
the  additional 

interest  payment  arises  due 

interest 

this 

the 

is 

if 

Denmark 

Estonia 

YES 

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 

45 

   EN 

 
 
 
process) no interests are chargeable and reimbursable on any amount of 
tax  (reported  on  the  tax  return)  subject  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  incurred  on  the  amount  of  taxes  to  be 
reimbursed  to  a  taxpayer  at  the  end  of  a  MAP  procedure  under  the 
Arbitration Convention, Estonia needs to modify its tax system 

Finland 

France 

Germany 

In principle yes. There are no any time limitations 

But in case of MAP no interest is charged 

NO 

YES 

Germany  provides  for  interest  payments  on  supplemental  tax  claims  or  tax 
refunds  for  a  time  period  starting  15  months  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 manifold: 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 the 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 interests according to Section 175a of the 
German Fiscal code 

Greece 

Hungary 

Italy 

Ireland 

Latvia 

YES 

YES 

YES 

NO 

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 

46 

   EN 

 
procedure under the Arbitration Convention. 

According to the first paragraph of Article 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  taken  or  a  court  has  adopted  a  decision  that  the 
payment  has  been  recovered  in  error.  The  refundable  amounts  shall  be 
increased by 0.025 per cent (interest fee) 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  incorrectly  recovered  tax  amount  and  interest  fee  for  the 
period from day when the tax was collected till day when the final decision 
in MAP was made 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

NO 

NO 

But interests are suspended during the MAP 

YES 

YES 

YES 

There  are  no  specific  rules  concerning  MAP  procedure;  In  case  of  late 
payment of tax, in principle an interest 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 

47 

   EN 

 
 
Romania 

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 

There are no specific rules on penalty’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 the penalty’s is “the secondary” 

Slovak Republic 

Yes 

There are no specific administrative rules concerning MAP and the interest 
in the Slovak Republic. However, according to the general rules laid down in 
the Tax Administration Act No. 511/1992 Coll., if the amount of the tax was 
decreased  (or  reimbursed)  by  a  legitimate  decision,  the  tax  administration 
would  ex  officio  decrease  (or  reimburse)  penalty  or  default  interest 
proportionally 

Slovenia 

YES 

Q1:  Yes,  in  general  the  Slovene  tax  system  foresees  the  reimbursement  of 
interests  although  it  should  be  pointed  out  that  Slovenia  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 

Sweden 

There are no specific rules for MAPs and the reimbursement is not automatic 

YES 

Sweden do not apply any time limitation 

United Kingdom 

YES in all cases 

EN 

48 

   EN 

 
 
 
 
 
 
ANNEX  V:  NUMBER  OF  PENDING  CASES  UNDER  THE  AC  AT  THE  END  OF  2007  (DOC  JTPF 

016/REV2/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 

0 

9 

0 

1 

5 

0 

2 

0 

0 

0 

0 

0 

0 

2 

BE 

0 

7 

0 

0 

5 

0 

0 

0 

0 

0 

0 

0 

0 

1 

DK 

2 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

2 

0 

2 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

2 

0 

DE 

0 

4 

18 

0 

10 

0 

11 

3 

3 

0 

1 

16 

0 

4 

18 

0 

10 

0 

11 

3 

3 

0 

1 

13 

EL 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

ES 

14 

1 

3 

0 

2 

0 

3 

0 

0 

6 

14 

1 

3 

1 

2 

0 

1 

0 

0 

6 

FR 

7 

4 

0 

8 

1 

4 

0 

0 

18 

7 

4 

2 

7 

1 

5 

0 

21 

IE 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

1 

IT 

0 

1 

0 

0 

0 

0 

3 

0 

1 

0 

1 

0 

1 

3 

LU 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

2 

10 

NL 

0 

0 

1 

2 

9 

5 
6 

Hungary has one case with Germany (2007) 
NL has one case with PL (where Poland does not have a case) and one case with HU (both in 2007) 

EN 

49 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
AT 

0 

0 

0 

0 

0 

0 

0 

0 

PT 

0 

0 

1 

0 

0 

2 

FI 

1 

0 

2 

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 formally closed by the other Contracting State 

EN 

50 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
2. Pending MAPs under the EU Arbitration Convention 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 

DK 

1 

1 

0 

0 

0 

1 

0 

0 

0 

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 

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 

0 

EL 

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 

0 

0 

0 

0 

0 

ES 

FR 

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 

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 

51 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FI 

0 

0 

0 

0 

SE 

0 

0 

Number of cases: 2 8 

8 

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  formally  closed  by  the  other 
Contracting State 

EN 

52 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3. Pending MAPs under the EU Arbitration Convention 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 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

BE 

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 

0 

DK 

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 

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 

0 

0 

0 

0 

0 

0 

0 

0 

1 

ES 

0 

0 

0 

0 

0 

0 

0 

0 

0 

FR 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

1 

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 

53 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FI 

0 

0 

0 

0 

SE 

0 

0 

Number of cases: 1-59 

9 

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  formally  closed  by  the  other 
Contracting State 

EN 

54 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
4. Pending MAPs under the EU Arbitration Convention 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 

DK 

1 

0 

0 

0 

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 

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 

1 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

1 

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 

0 

0 

0 

0 

0 

0 

0 

0 

ES 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

FR 

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 

55 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FI 

0 

0 

0 

0 

SE 

0 

0 

Number of cases: 1-5 10 

10 

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  formally  closed  by  the  other 
Contracting State 

EN 

56 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
5. Pending MAPs under the EU Arbitration Convention 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 

0 

0 

DK 

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 

0 

0 

0 

0 

0 

0 

0 

0 

0 

DE 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

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 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

FR 

0 

0 

IE 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

2 

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 

1 

0 

0 

0 

0 

1 

AT 

0 

0 

0 

0 

0 

0 

0 

0 

PT 

0 

0 

0 

0 

0 

0 

EN 

57 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FI 

0 

0 

0 

0 

SE 

0 

0 

Number of cases: 4-6 11 

11 

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  formally  closed  by  the  other 
Contracting State 

EN 

58 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
6. Pending MAPs under the EU Arbitration Convention 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 

0 

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 

0 

0 

0 

0 

DK 

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 

0 

0 

1 

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 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

1 

0 

0 

0 

FR 

0 

1 

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 

1 

0 

0 

0 

0 

1 

1 

AT 

0 

0 

0 

0 

0 

0 

0 

0 

PT 

0 

0 

0 

0 

0 

0 

EN 

59 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FI 

0 

0 

0 

0 

SE 

0 

0 

Number of cases: 3-812 

12 

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  formally  closed  by  the  other 
Contracting State 

EN 

60 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
7. Pending MAPs under the EU Arbitration Convention 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 

DK 

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 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

3 

DE 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

3 

0 

0 

1 

0 

0 

1 

0 

3 

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 

1 

1 

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 

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 

61 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FI 

0 

0 

0 

0 

SE 

0 

0 

Number of cases: 6-1113 

13 

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  formally  closed  by  the  other 
Contracting State 

EN 

62 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
8. Pending MAPs under the EU Arbitration Convention 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 

4 

0 

0 

3 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

4 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

DK 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

DE 

0 

2 

4 

0 

3 

0 

1 

1 

1 

0 

0 

3 

0 

2 

5 

0 

3 

0 

1 

1 

1 

0 

0 

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 

0 

0 

0 

0 

0 

0 

0 

0 

0 

3 

0 

0 

0 

0 

0 

1 

0 

0 

2 

FR 

1 

0 

0 

0 

0 

1 

0 

0 

5 

1 

0 

0 

0 

1 

0 

0 

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 

1 

0 

0 

0 

0 

0 

0 

0 

LU 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

NL 

0 

0 

0 

0 

AT 

0 

0 

0 

0 

0 

0 

0 

0 

PT 

0 

0 

0 

0 

0 

0 

EN 

63 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FI 

0 

0 

0 

0 

SE 

0 

0 

Number of cases: 29-4214 

14 

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  formally  closed  by  the  other 
Contracting State 

EN 

64 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
9. Pending MAPs under the EU Arbitration Convention 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 

1 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

2 

0 

1 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

DK 

0 

0 

0 

0 

0 

1 

5 

DE 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

2 

1 

0 

0 

3 

0 

1 

7 

0 

2 

1 

0 

0 

0 

3 

EL 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

ES 

4 

0 

1 

0 

1 

0 

2 

0 

0 

1 

3 

0 

1 

0 

1 

0 

0 

0 

0 

1 

FR 

4 

2 

0 

2 

1 

0 

1 

0 

7 

4 

2 

1 

3 

1 

1 

1 

0 

6 

0 

0 

0 

0 

0 

0 

0 

0 

IE 

0 

0 

0 

0 

0 

0 

0 

IT 

0 

1 

0 

0 

0 

0 

1 

0 

1 

0 

1 

0 

1 

3 

LU 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

NL 

0 

0 

0 

1 

5 

0 

1 

0 

0 

3 

AT 

0 

0 

0 

0 

0 

0 

0 

0 

PT 

0 

0 

1 

0 

0 

2 

EN 

65 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FI 

1 

0 

2 

0 

SE 

0 

0 

Number of cases: 45-6615 

15 

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  formally  closed  by  the  other 
Contracting State 

EN 

66 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
10. Pending MAPs under the EU Arbitration Convention 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  NL17 AT  PT  FI  SE  UK 

0 

1 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

0 

BE 

0 

1 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

0 

1 

0 

1 

9 

DK 

1 

0 

0 

0 

0 

1 

3 

DE 

0 

0 

0 

0 

0 

0 

1 

0 

1 

0 

6 

0 

4 

1 

1 

0 

1 

0 

0 

1 

5 

6 

0 

4 

1 

1 

0 

1 

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 

1 

2 

0 

1 

0 

1 

0 

0 

2 

6 

1 

2 

1 

1 

0 

0 

0 

0 

2 

FR 

2 

1 

0 

5 

0 

1 

1 

0 

5 

2 

1 

1 

4 

0 

2 

1 

0 

5 

IE 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

0 

1 

0 

0 

0 

0 

0 

0 

1 

IT 

0 

0 

0 

0 

LU 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

0 

NL 

0 

0 

0 

4 

0 

0 

0 

1 

4 

AT 

0 

0 

0 

0 

0 

0 

0 

0 

16 
17 

Hungary has one case with Germany (2007) 
NL has one case with PL and one case with HU (both in 2007) 

EN 

67 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
0 

0 

0 

PT 

0 

0 

FI 

1 

0 

2 

0 

SE 

0 

0 

Number of cases: 55-8118 

18 

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  formally  closed  by  the  other 
Contracting State 

EN 

68 

   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 

2006 

2005 

2004 

2 

2 - 5 

16 - 24 

24 

1 - 5 

3 - 6 

1 - 13 

8 

1 - 5 

0 - 4 

5 - 10 

12 

4 - 6 

4 - 9 

10 - 18 

24 

3 - 8 

10 - 16 

12 - 23 

23 

6 - 11 

8 - 20 

12 - 25 

16 

29 - 42 

39 - 55 

42 - 68 

0 

45 - 66 

46 - 69 

55 - 81 

146 - 226 

112 - 184 

98 - 181 

107 

19 

EN 

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 formally closed 
by the other Contracting State 

69 

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 

BELGIUM 

BULGARIA 

Mr. Karl BRUCKNER  
Mr. Siegfried DAPOZ 
Mrs Veronika BERECZ 
Mr. Wolfgang MALZER 
Mr. Robert OTTEL 
Mr. Jacques AUTENNE 
Mr. L.A. DENYS 
Mr. Jacques GHYSBRECHT 
Mr. Luc HINNEKENS 
Mr. Jacques MALHERBE 
Mr Bisser Slavkov 
Mr Alexander Penov 
Mrs Dimitrinka Spiridonova 
Mrs Evelina Dimitrova 

CYPRUS 
CZECH REPUBLIC  Mr. Frantisek FRANCIREK 

Mr Tomas KROLUPPER 
Mr. Jiri NEKOVAR 
Mr. Marek ROMANCOV 
Mr. Richard SVEJDA 
Mrs. Lene Pagter KRISTENSEN 
Mr. Aage MICHELSEN 
Mr. Jan PEDERSEN 
Mr. Soren Lehman NIELSEN 
Mr. John BYGHOLM 

Mr. Raimo IMMONEN 
Mr. Seppo PENTTILÄ 
Mrs. Marjaana HELMINEN 
Mr. Ahti VAPAAVUORI 
Mrs. Hannele RANTA-LASSILA 
Mr. Dominique LATOURNERIE 
Mr. Jean GROUX 

DENMARK 

ESTONIA 
FINLAND 

FRANCE 

08.2000 
08.2000 
12.2007 
12.2007 
12.2007 
1995 
1995 
1995 
1995 
1995 
04.2008 
04.2008 
04.2008 
04.2008 

01.2007 
01.2007 
01.2007 
01.2007 
01.2007 
1.2006 
11.1993 
11.1993 
1.2006 
1.2006 

12.2004 
12.2004 
06.2006 
12.2004 
12.2004 
12.2001 
02.1996 

NO 
NO 
NO 
NO 
NO 
YES 
YES 
NO 
YES 
YES 
NO 
YES 
NO 
YES 

NO 
NO 
NO 
NO 
NO 
YES 
YES 
YES 
YES 
NO 

NO 
NO 
NO 
NO 
NO 
YES 
YES 

EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 

EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 

EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 

EN CV 

EN CV 
EN CV 
EN CV 

20 
21 

On the basis of the information available to the Commission Services 
On  the  basis  of  point  4.1  (c)  of  the  Code  of  Conduct  for  the  effective  implementation  of  the  AC 
(COM2004/297final) 

EN 

70 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Mr. Guy GEST 
Mr. Philippe THIRIA 
Mr. Robert BACONNIER 
Mr. Thomas BORSTELL 
Mrs. Jutta FÖRSTER 
Mr. Jörg-Dietrich KRAMER 
Mr. Andreas OESTREICHER 
Mr. Matthias WERRA 
Mrs Paschalis CONSTANTINOS 
Mr. Panagiotis DAMILAKOS 
Mrs. Katerina SAVVAIDOU 
Mr. Antonis ATHANASOPOULOS 
Mr. Fotios NICOLAIDIS 

Ms Marie Barr 
Mr Paul McGowan 
Mr Fergal O’Rourke 
Mr Dermot Quigley 
Mr Jim TIERNEY 
Mr. Pietro ADONNINO 
Mr. Franco CALEFFI 
Ms. Silvia CIPOLLINA 
Mr. Enrico NUZZO 
Mr. Andrea SIMONI 

Mr. Arno SCHLEICH 
Mr. Martin SCHROEDER 
Mr. Corneille BRUCK 
Mr. André ELVINGER 
Mr. Pierre PESCATORE 
Ms Juanita Bezzina 
Mr Neville Gatt 
Mr Conrad Cassar Torreggiani 
Mr Antoine Fiott 
Mr Stephen Attard 
Mrs. I.J.J. BURGERS 
Mr. J.A.C.A. OVERGAAUW 
Mr. H.MA.L. HAMAEKERS 
Mrs. C. SILBERZTEIN 
Mrs. F. GISKES 
Mr. Bogumił Brzeziński 
Mr. Jan Głuchowski 
Mrs.Renata Hayder 
Mrs. Hanna Litwińczuk 
Mr. Włodzimierz Nykiel 
Mr. Rogério FERNANDES 
FERREIRA 

02.1996 
12.2001 
02.1996 
09.2005 
09.2005 
09.2005 
09.2005 
09.2005 
10.2005 
10.2005 
10.2005 
10.2005 
10.2005 

01.2004 
01.2004 
01.2004 
01.2004 
01.2004 
02.1994 
02.1994 
10.2005 
02.1994 
02.1994 

04.2001 
04.2001 
09.1994 
09.1994 
09.1994 
06.2008 
06.2008 
06.2008 
06.2008 
06.2008 
03.1996 
05.2007 
05.2007 
05.2007 
05.2007 
04.2008 
04.2008 
04.2008 
04.2008 
04.2008 
11.2005 

YES 
YES 
YES 
NO 
YES 
YES 
NO 
NO 
YES 
NO 
NO 
NO 
NO 

NO 
NO 
NO 
NO 
NO 
YES 
YES 
YES 
YES 
YES 

YES 
YES 
YES 
YES 
YES 
YES 
YES 
YES 
YES 
YES 
YES 
YES 
YES 
YES 
NO 
YES 
YES 
NO 
YES 
YES 
YES 

DE/EN CV 
DE/EN CV 
DE/EN CV 
DE/EN CV 
DE CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 

EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN/IT CV 
EN/IT CV 
EN/IT CV 
EN/IT CV 
EN/IT CV 

EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 
EN CV 

71 

   EN 

GERMANY 

GREECE 

HUNGARY 
IRELAND 

ITALY 

LATVIA 
LITHUANIA 
LUXEMBOURG 

MALTA 

NETHERLANDS 

POLAND 

PORTUGAL 

EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ROMANIA 
SLOVAKIA 

SLOVENIA 
SPAIN 

SWEDEN 

UNITED 
KINGDOM 

Mr. José Guilherme XAVIER DE 
BASTO 
Mr. José Luís SALDANHA 
SANCHES 
Mr. António MARTINS 
Mr. José VIEIRA DOS REIS 

Mr. Vaclav DUFALA 
Mrs. Gizela LENARTOVA 
Mr. Artur OBERHAUSER 
Ms. Christiana SERUGOVA 
Mr. Marian TOTH 

11.2005 

YES 

11.2005 

YES 

11.2005 
11.2005 

03.2007 
03.2007 
03.2007 
03.2007 
03.2007 

NO 
NO 

YES 
YES 
YES 
NO 
NO 

EN CV 
EN CV 
EN CV 
EN CV 
EN CV 

Mr. José Manuel CALDERON 
CARRERO 
Mr. Miguel CRUZ AMOROS 
Mr. Abelardo DELGADO PACHECO 
Mr. Luis LOPEZ-TELLO Y DIAZ 
AGUADO 
Mr. Fernando VELAYOS JIMENEZ 
Mrs. Kerstin BOSTRÖM 
Mr. Stefan ERSSON 
Mr. Carl Gustav FERNLUND 
Mr. Sven-Olof LODIN 
Mrs Ingrid MELBI 
Mrs. Nuala BRICE 

Mr. James David DEMACK 
Mr. Malcolm GAMMIE QC 
Mr. Avery JONES CBE 
Mr. Gordon REID QC 

10.2005 

YES 

EN/SP CV 

10.2005 
10.2005 
10.2005 

10.2005 
01.2006 
01.2006 
01.2006 
01.2006 
01.2006 
02.2002 

02.2002 
02.2002 
02.2002 
02.2002 

YES 
YES 
YES 

YES 
YES 
YES 
YES 
YES 
YES 
YES 

YES 
YES 
YES 
YES 

EN/SP CV 
EN/SP CV 
EN/SP CV 

EN/SP CV 

EN CV 
EN CV 
EN CV 

EN CV 
EN CV 
EN CV 
EN CV 

EN 

72 

   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  statement  of  independence  and  disclose  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  provide  such  information  to  the  Competent 
Authorities  in  writing  and  fix  a  time  limit  for  any  comments  from  them.  An 
independent  person  of  standing  shall  immediately  disclose  in  writing  to  the 
Secretariat  and  to  the  Competent  authorities  any  facts  or  circumstances  of  a 
similar nature which may arise during the arbitration. 

ACCEPTANCE 

(cid:133) 
hereby declare that I accept to serve as independent person of standing in an advisory 
commission ruled by the principles established in the Convention on the 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  declaring,  I  confirm  that  I  have 
familiarized myself with the requirements of the provisions of the Convention and I am able 
and  available  to  serve  as  an  arbitrator  in  accordance  with  all  of  the  requirements  of  those 
provisions, 

INDEPENDENCE 

(If you accept to serve as an independent person of standing, please also check one of the two 
following boxes. The choice of which 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  administrations  and  the  companies  or  Multinational 
Enterprises or their counsel), whether financial, 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.) 

(cid:133) 
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 provision 4.2 C of the Code of Conduct on the AC 

EN 

73 

   EN 

 
                                                 
knowledge, there are no facts or circumstances, past or present, that need be disclosed because 
they might be of such nature as to call into question my independence in the eyes of any of the 
parties 

OR 

(cid:133) 
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 circumstances which I hereafter disclose because they 
might  be  of  such  a  nature  as  to  call  into  question  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 

(cid:133) 
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 situation prevailing in each Member State it was agreed by the members 
of  the  JTPF  to  clarify  how  their  tax  administration  applies  Article  7  (3)  in  practice.  It  was 
considered  that  this  situation  can  lead  to  long  delays  in  the  application  of  the  Arbitration 
Convention and the elimination of double taxation. 

Question 1: 

Considering  Art.  7(3)  "Where  the  domestic  law  of  a  Contracting  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 associated enterprise of that 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  consider  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 those countries who can derogate be willing to 
derogate in practice? 

Question 4: 

MS  who  cannot  derogate,  do  they  stop  in  practice  all  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 his judicial appeals? 

EN 

74 

   EN 

 
Question 5: 

In  general  it  may  be  useful  to  learn  about  any  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 

75 

   EN 

 
Answers to question 1: 

Considering  Art.  7(3)  "Where  the  domestic  law  of  a  Contracting  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 associated enterprise of that 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 

Austria 

Belgium 
Bulgaria 
Cyprus 
Czech Republic 

Denmark 
Estonia 
Finland 

France 

Question 1 
No 
In  Austria  it  is  not  possible  to  derogate  from  decisions  of  the  Supreme 
Adminstrative  Court  (Verwaltungsgerichtshof)  or  from  decisions  of  the 
Supreme Constitutional Court (Verfassungsgerichtshof). 

NO 
No 
No 
No 
Generally any decision of the Tax administration must be in accordance with 
the decision of the Court 
No 
No 
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 procedures; a MAP may be launched when 
the final decision is reached (see below) 
Selon le paragraphe 3 de l'article 7 de la convention européenne d'arbitrage, 
dans les cas où la législation interne d'un Etat contractant ne permet pas aux 
autorités compétentes de déroger aux décisions de leurs instances judiciaires, 
la procédure d'arbitrage n'est possible que si l'entreprise a laissé s'écouler le 
délai  de  présentation  du  recours  auprès  des  juridictions  nationales  ou  s'est 
désistée de ce recours avant qu'une décision 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 convention européenne d'arbitrage. 

Dans  sa  déclaration  unilatérale  faite  le  jour  de  la  signature  de  cette 
convention, la France a indiqué qu'elle ferait 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  faisant,  remettre  en  cause  une  décision  de 
justice  passée  en  force  de  chose  jugée.  Par  conséquent,  les  contribuables 
concernés  devront  donc  faire  le  choix  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 

76 

   EN 

 
 
 
Ainsi, en application de ces principes, en cas de recours contentieux exercé 
par l'entreprise, le délai de deux ans prévu au paragraphe 1 de l'article 7 de la 
convention d'arbitrage au terme duquel la commission consultative doit être 
constituée,  à  défaut  d'avoir  trouvé  un  accord  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  contre  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 

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 implementation of a mutual agreement understanding 
is concerned 

The Hellenic Tax Authorities can not derogate from the decisions of 
judicial bodies, due to constitutional reasons. The judicial bodies responsible 
for tax disputes are the Administrative Courts: Administrative Court of first 
Instance, Administrative Court of Appeal, and Council of State 
No, 
Due to constitutional and administrative reasons 
No 
No 
No 
Latvia’s State Revenue Service can not derogate from the decision of judicial 
bodies.  The  judicial  body  in  this  context  is  Administrative  Court  (three 
instances:  District  Administrative  Court,  Regional  Administrative  Court, 
Administrative  Department  of  Senate  of  Supreme  Court).  According  to  the 
6th paragraph of Article 37 of Law on Taxies 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 cassation procedure. In accordance with 
Article 351 of Administrative Procedure Law this judgment is final and can 
not be appealed 

NO 

No 
Malta cannot derogate 
Yes 
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  legally  valid  judicial  decision  (final 
decision)  is  obliging  to  the  tax  administration  involved  in  individual  case. 

Germany 

Greece 

Hungary 

Italy 
Ireland 
Latvia 

Lithuania 
Luxembourg 
Malta 

Netherlands 
Poland 

EN 

77 

   EN 

 
 
 
 
 
Portugal 

No 

Judicial decision is final when the appeal is not allowed 

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 provisions of Art. 7(3) of the AC shall be 
applied. 
The juridical effects from a judicial decision can’t, therefore, be modified by 
a decision from the Tax Administration or by a solution reached within the 
scope of a mutual agreement procedure 
No 

Tax administration cannot derogate from a court decision 

No. 

Slovak Tax Administration can not derogate from the Court decisions. 

No. 
In  case  of  Slovenia  the  Slovene  Tax  administration  can  not  derogate  the 
decisions taken by judicial bodies 
Spanish Constitution does not allow tax administration to act against a 
judicial decision 

Yes, 
the  Swedish  Competent  Authority  can  derogate  from  the  decisions  of  the 
judicial  bodies  if  this  follows  from  a  provision  in  a  Double  Taxation 
Agreement  or  another  agreement  to  eliminate  double  taxation  such  as  the 
Arbitration  Convention  (Chapter  7  Paragraph  4  of  the  Tax  Assessment  Act 
(1990:324) 

Romania 

Slovak Republic 

Slovenia 

Spain 

Sweden 

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  consider  to  be  a  judicial  body  and  when  is  the 
decision considered as final? 

Member State 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 

Question 2 
NA 
NA 
NA 
NA 
NA 
NA 
NA 
The assessment adjustment board is the first instance of appeal in every tax 
district  and,  thus,  can  be  considered  as  judicial  body.  The  Administrative 
Courts  are  also  considered  as  judicial  bodies.  Administrative  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 has expired, the Supreme Administrative 
Court has given its decision or the right to appeal has been denied 

EN 

78 

   EN 

 
 
 
France 
Germany 

Greece 
Hungary 
Italy 
Ireland 
Latvia 
Lithuania 
Luxembourg 
Malta 
Netherlands 

Poland 
Portugal 
Romania 
Slovak Republic 
Slovenia 
Spain 
Sweden 

NA 

A decision is considered final where a judgement has the force of res 
judicata and, in particular, a tax assessment notice becomes legally 
enforceable. The tax assessment notice itself 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 court 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 regarding fiscal matters, insofar as the taxes are subject 
to the Federation’s legislative powers and are administered by the Federation 
or Länder (federal state) revenue authorities. Fiscal jurisdiction is exercised 
by special, independent administrative courts 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 
. 

NA 
NA 
NA 
NA 
NA 
NA 

NA 
The Netherlands consider a court or a tribunal to be a judicial body  (i.e. in 
The  Netherlands:  Rechtbank,  Gerechtshof,  Hoge  Raad).  A  decision  is 
considered to be final if all rights to appeal are no longer open 

NA 
NA 
NA 
NA 
NA 
NA 

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  administration  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 

79 

   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 administrative 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 administrative court was announced. 

A  decision  made  by  the  Administrative  court  of  appeal  can  be  appealed 
against  to  the  Supreme  administrative  court,  but  the  decision  will  be 
reconsidered  by  the  Supreme  administrative  court  only  if  the  Supreme 
administrative court grants a leave to appeal. The decision is considered final 
on the day the Supreme administrative court announces its decision. 

United Kingdom  The General Commissioners, Special Commissioners 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 those countries who can derogate be willing to 
derogate in practice? 

Member State 

Question 3.1 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 

France 
Germany 

Greece 
Hungary 
Italy 
Ireland 
Latvia 
Lithuania 
Luxembourg 
Malta 
Netherlands 
Poland 
Portugal 

NA 
NA 
NA 
NA 
NA 
NA 
NA 
No cases 

Sans objet compte tenu de la réponse à la question 1 
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 

NA 
NA 
NA 
NA 
NA 
NA 

NA 
Yes 
NA 
NA 

Question 
3.2 

NA 
NAN 
NA 
NA 
NA 
NA 
Yes if 
necessary 

Not 
applicable 
nicht 
angezeigt 

NA 
NA 
NA 
NA 
NA 
NA 

NA 
- 

EN 

80 

   EN 

 
 
 
 
 
 
 
 
 
 
 
Romania 
Slovak Republic 
Slovenia 
Spain 
Sweden 

NA 
NA 
NA 
NA 
Yes. 
There have been such cases in Sweden, though not yet under the 
Arbitration convention  

NA 
NA 

NA 
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  all  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 his judicial appeals? 

Member State 

Austria 

Belgium 

Question 4 
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. 
Enterprises can introduce an (administrative) appeal – which may be 
followed by a judicial procedure as provided for in domestic law – and at the 
same time start the procedure under the AC. 

However, the AC provides that where the 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 that 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 judicata associated with a judicial 
judgment according to domestic law. The Belgian tax administration is not 

EN 

81 

   EN 

 
 
 
 
 
empowered to conform to a decision reached at the end of an arbitration 
procedure where this decision questions a judicial judgement in res judicata. 

Therefore, up till now, the Belgian authorities are of the opinion that the 
enterprises concerned have to make a choice between either continuing the 
procedure provided for in domestic law or continuing the procedure provided 
for in the AC. 

This  position  is  stated  in  Circular  AFZ/INTERN  IB/98-0170  of  July  7th, 
2000.  However,  this  circular  will  be  updated  and  will  contain  additional 
clarifications concerning MAP, the advisory commission and other elements 
regarding the AC 
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  Bulgarian  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  and  wait  for  the  final  MAP  outcome.  In 
such  a  case  the  Bulgarian  Revenue  Authorities  would  proceed  with  the 
negotiations with the other MS 
No experience 
In  practice,  in  case  of  judicial  proceedings  out  tax  administration  should 
interrupt MAP and wait for the decision of the judicial body 
We will continue the procedure and 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. 
It might be that we will stop negotiations 
NA 
Si cette renonciation n'est pas effectuée par l'entreprise, les discussions entre 
autorités  compétentes  dans  la  phase  amiable  de  la  procédure  peuvent  en 
pratique se poursuivre et, le délai de deux 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  imposition,  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  consultative  ne  pourra  être  constituée 
dès lors qu'une solution amiable s'était dégagée 
NA 
See Q5 
As  we  have  indicated  formerly  Hungary  cannot  give  practical  examples  on 
the application of the Arbitration Convention yet. Theoretically, if there is a 
final  judicial  decision,  Hungarian  competent  authority  has  to  dismiss  the 
claim and must finish the process without any delay 
An existing litigation does not prevent that the initial stage provided for by 
the  Arbitration  Convention  –  i.e.  the  mutual  agreement  procedure  –  is 
started.  Therefore,  the  mutual  agreement  procedure  continues  even  if  a 
litigation  is  in  progress.  On  the  other  hand,  the  situation  is  more  complex 

Bulgaria 

Cyprus 
Czech Republic 

Denmark 

Estonia 
Finland 
France 

Germany 
Greece 
Hungary 

Italy 

EN 

82 

   EN 

 
 
 
with respect to the second stage provided for by the above Convention, that 
is the arbitration stage. 

Assumption  n.  1.  Both  competent  authorities  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 approval 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  delivered  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 agreement, however, it is not possible to set 
up an advisory commission. 
We  have  no  experience  of  this  aspect  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. Once 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 concerned has withdrawn any appeal against 
a matter to be dealt with by that commission 
Latvia stops the negotiations in such situation because there is no possibility 
to change the decision of judicial body. 
No experience 

If the case is under objection but has not proceeded 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 

Ireland 

Latvia 

Lithuania 
Luxembourg 
Malta 

23 

If the decision is in favour of the taxpayer, there will be no double taxation any more.  

EN 

83 

   EN 

 
 
 
 
 
 
                                                 
whether  to  continue  under  the  Mutual  Agreement  Procedure  or  the  domestic 
procedure. If the tax payer opts for the latter, all negotiations with the other Member 
State will cease.  

Portugal 

Romania 

Slovak Republic 

Netherlands 
Poland 

NA 
Polish provisions regulating administrative court procedure does not provide 
for  automatic  suspension  of  initiated  court  proceeding  on  the  ground  of 
pending MAP. Moreover, after final court 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. 
Although  no  case  of  application  of  Art.  7  (3)  is  so  far  known  to  us,  it  is 
admissible  that  in  practice  the  Tax  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 intention to withdraw his appeal 
No  experience  yet.  Still  it  can  be  mentioned  that  a  court  decision  is 
mandatory 
If  the  taxpayer  believes,  that  the  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  action,  decides  the  same  matter  to  be 
resolved  under  the  mutual  agreement  procedure  between  the  competent 
authorities  under  the  Arbitration  Convention,  he  should  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  applied,  if  it  derogated  from  the  court 
decision 
Slovenia did not have any cases under the Arbitration Convention yet. This 
means  that  there  is  not  a  lot  of  experience  in  this  field.  In  general  the 
taxpayer  would  have  to  decide  whether  to  continue  reaching  an  agreement 
under MAP or under domestic judicial appeal 
As long as there is no judicial decision, both MAP and judicial procedure can 
continue  at  the  same  time.  Once  an  agreement  is  reached  within  a  MAP, 
Spanish competent authorities will inform 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 

Slovenia 

Spain 

Answers to question 5 

In  general  it  may  be  useful  to  learn  about  any  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 

Austria 
Belgium 
Bulgaria 

Question 5 

No experience 

EN 

84 

   EN 

 
 
 
 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 
France 

Germany 

No experience 

NA 
No experience 
NA 
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  entreprises  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 
In general it may be useful to learn about any 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? 

The  majority  of  German  arbitration  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 agreement 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/lawsuit, prior to the implementation of a 
mutual agreement understanding through a tax assessment notice. Where no 
appeals procedure is pending, the revenue authorities ensure that applicants 
abstain from the submission of an appeal, insofar as the results of the mutual 
agreement understanding are implemented appropriately through the notice. 

Where a case is taken to court in a foreign country unable to derogate from 
its  decisions,  Germany  conducts  a  mutual  agreement  procedure  pursuant  to 
Article  6  of  the  Arbitration  Convention.  Germany  does,  however,  take  the 
view that the advisory commission may not be convened 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 application 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 

85 

   EN 

 
 
 
 
 
 
 
 
Hungary 

Italy 

Ireland 
Latvia 
Lithuania 
Luxembourg 
Malta 
Netherlands 
Poland 

Portugal 
Romania 
Slovak Republic 
Slovenia 

Spain 
Sweden 

As to our experiences on national level, 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 further investigation. 
It  could  be  useful  to  learn  about  the  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 before a decision has been delivered. 
Should  the  taxpayer  withdraw  the  appeal  before  a  decision  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  could  be  useful  to  learn  whether  this 
position is shared by all countries applying article 7, paragraph 3. 

No experience 

No experience 

No experience 
No experience 
No experience 

No experience 
No experience 
No experience 
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 experience 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 case, 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  interests stated in the provision. If the 
penalties  and  late  interests  are  in  the  course  of  appeal  proven  to  be  wrong 
they will be returned to the taxpayer 

/ 
In Sweden we have traditionally taken 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 competent authority. However, from 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 

86 

   EN 

 
 
 
 
There are two reasons for this practise. First 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 Swedish 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  mutual  agreement  procedure  under  a  tax 
agreement  is  intended  to  be  an  extra  ordinary  or  last  resort  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 least one court has already tried it. The case 
is often better analysed in such a situation. 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 

87 

   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 national 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  Arbitration  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 procedures 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 intends to issue administrative guidelines on 
transfer  pricing.  In  the  drafting  of  these  guidelines  the  Code  of  Conduct  of  the  AC  will  be 
taken into consideration. 

b) Position/situation in respect 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 
the  Federal  Fiscal  Procedure  Act  –  §  212 
Bundesabgabenordnung/BAO). 

(Section  212  of 

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 context of mutual agreement 
procedures based either on DTC or on the AC. Such measures would 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 

88 

   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  issued  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 willing to suspend tax collection as recommended 
by the Code by virtue of the provisions 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  recommendations  done  by  this  CoC.  Thus  its  principles 
shall be implemented through the administrative practice. 

As regards the suspension of tax collection during 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  administration  either  to  defer  his  tax 
payments or to allow him to pay by instalments, if immediate payment would cause serious 
detriment to the tax debtor or if it is impossible for other serious reasons 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 apply the CoC when applying the AC.” 

ESTONIA 

In Estonia, as for The Code of Conduct on the Arbitration Convention, we will not implement 
it  into  our  national  legislation,  but  we  will  implement  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 international double taxation is allowed by article 
90 of the Tax Procedure Act (90§ Laki verotusmenettelystä 18.12.1995/1558) 

FRANCE 

EN 

89 

   EN 

 
La  France  a  soutenu  sans  réserve  les  travaux  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  instruction  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  reprend  les  conclusions  du  Code  de 
conduite pour la mise en œuvre de la convention européenne d’arbitrage et s’inspire de celui-
ci pour les procédures amiables bilatérales. 

Par ailleurs, la France a adopté un texte spécifique – l’article L189A du Livre des procédures 
fiscales  –  qui  met  en  place  une  procédure  de  suspension  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 proposition 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'élimination des doubles impositions en cas de 
correction  des  bénéfices  d'entreprises  associées  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 applicables aux procédures amiables ouvertes à compter du 1er janvier 
2005. 

GERMANY 

Germany  has  revised  its  Manual  on  Mutual  Agreement  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 the suspension of tax collection during MAPs under the 
Arbitration  Convention  or  a  double  tax  treaty  with  another  Member  State,  the  Ministry  of 
Finance is currently examining possible legislative amendments to the General Tax Code that 
would allow for the suspension of tax collection 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  administration  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 assessment of the remaining 90% is suspended until 
the relevant judicial decision is taken. 

Moreover, according to the provisions of articles 200-205 of Code 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 border procedure settlement is pending. 

EN 

90 

   EN 

 
Consequently, we believe that it is not necessary to introduce additional legislative measures 
for the  suspension  of tax  collection,  especially in cases where dispute resolution  procedures 
are in progress, since this issue is already covered, even indirectly, by the existing legislation. 

When these issues are finalized at European Community Level and legislative adaptations are 
deemed necessary, the Greek Tax Administration will examine the whole matter anew. 

HUNGARY 

The  Hungarian  Government  had  accepted  the  concept  and  draft  of  Act  of  Parliament  on 
modifications of Tax Procedure Act on 26th of September 2007. As the Parliament had voted 
this draft, the Amending Act had been published under the title “Act CXXVI of 2007” on 16th 
of November 2007. 

The Amending Act incorporated some significant rules of Code of Conduct, such as: 

(i) suspension of tax collection 

(ii)  formal  acknowledgement  of  receipt  of  taxpayer's  request,  minimum  content  of  request, 
starting point of 2-year-deadline. 

These  incorporative  rules  had  been  set  out  in  Art.  176/A.  of  Act  XCII  of  2003  on  Tax 
procedure with retroactive effect. According to the decision No. 35/2007. (XII. 4.) of Minister 
of  Foreign  Affairs,  these  incorporative  rules  and  the  Act  on  AC  came  into  effect 
simultaneously, from 1st 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  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 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  open  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,  Italy  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  code  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  Arbitration  Convention,  already  provided  for  the 
suspension of the collection or of the execution proceedings to international disputes started in 
accordance with the Arbitration Convention. 

EN 

91 

   EN 

 
LATVIA 

As the Arbitration Convention was ratified and is in force in Latvia since 1 June, 2007, Latvia 
hasn’t any intend at this moment regarding implementation 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 administrative guidelines and administrative practice.  

Suspension of tax collection: 

The domestic law of Latvia provides the provisions 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  decision  of  tax  administration.  Such  a  decision 
could be used also in the scope of Arbitration Convention. 

LITHUANIA 

Implementation of Code of Conduct on the Arbitration Convention 

The  Tax  Administration  of  Lithuania  hasn't  plans  for  any  kind  of  formal  implementation  of 
the Code on Conduct  of  the  AC.  It  will be implement in administrative practices. Also Tax 
Administration is preparing Guidelines 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 allows for the suspension of tax 
collection when taxpayer appeal against 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  incorporates  the  Arbitration 
Convention into Maltese Law and specifies that this Convention is to be interpretated in line 
with the said Code. 

Suspension of tax collection: 

Article 41(1) of the Income Tax 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 collection of not less than ninety per cent of that 
part of the tax assessed there under which is in dispute." 

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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  and  streamlined  its  publications  on  mutual  agreement 
procedures.  The  Code  of  Conduct  on  the  Arbitration  Convention  is  included  in  the  updated 
decree  (IFZ2008/  248M  of  29  September  2008).  In  practice  the  Netherlands  had  already 
started to apply the Code of Conduct. 

Suspension of tax collection 

Par. 3.1.8. of the Netherlands' Ministry of Finance of Decree No. IFZ 2001/295M, officially 
published in Dutch on 30 March 2001 reads: “Where the Netherlands is the state making the 
adjustment, the Netherlands' tax administration 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  which  both  the  domestic  and  the  international  procedures  for 
resolving  the  dispute  have  been  completed.  The  policy  in  this  respect  will  be  based  on  the 
policy applying to objections lodged against tax 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  Minister  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 important State interest. In both cases decision is taken by head of tax 
office. 

PORTUGAL 

Some  administrative  guidelines  are  presently  under  way  to  disclose  through  the  website  the 
provisions of the Code of Conduct. It is also deemed 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  the  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 provisions of the arbitration convention will be 
implemented as from January 2008. 

SLOVAK REPUBLIC 

The Code of Conduct for the effective implementation of the Arbitration Convention has been 
published by the Ministry of Finance of the Slovak Republic on its official website and should 
be  followed  as  an  administrative  practice  when  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  administration  and  public  after  the  ratification  of  the 
Arbitration Convention/Accession Convention by all relevant Member States. 

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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  suspension  of  tax  collection  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 authority for a period of maximum 12 months from 
the day when the tax payment is due. 

SLOVENIA 

In  Slovenia,  Accession  Convention  to  the  Arbitration  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 implemented 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  suspension  of  recollection  of 
taxes when a MAP or AC is requested. 

SWEDEN 

We consider the procedure currently used in Sweden in line with the rules set up in the Code 
of Conduct on the Arbitration Convention and therefore have not taken any specific steps of 
implementation. 

The Swedish system regarding penalties, tax surcharge, is based on the taxpayer providing the 
Tax  Authority  with  misleading,  incorrect  or  insufficient  information.  Remission  of  the  tax 
surcharge might be given in certain 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 Convention 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 domestic 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  replies  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 

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instrument / legal 
reference 

administrative 
practice / 
administrative 
reference  

In preparation 

YES 

YES 
Circular 2007/5 
dated 15/02/2007 

YES 

YES 
Administrative 
decision (SKM 
2005.2.TSS) 
YES 

YES 

YES 

YES 

YES 

Art. 176/A. of Act 
XCII of 2003 on 
Tax Procedure  

NO 
(in preparation) 

YES 

YES 

95 

reference 

YES 
section 212a and section 
48 
Bundesabgabenordnung 
(BAO) Federal Fiscal 
Procedure Act 
YES 
Art 410 clause 3 of 
Belgian Income Tax Code 
1992 
YES 
Income Tax Laws 2002-
2006 Art. 3 & 45 
Regulation Nr 87/2007 
published in the Official 
Gazette No.4176 dated 
23/02/2007. 
Exceptionally 

YES 
Art. 51 of the Tax 
Administration Act 

YES 
Taxation Act §128(2) 5 
and §146 (3) 
YES 
Art. 90 of the Tax 
Procedure Act  
YES 
Livre des procedures 
fiscales 
Art. L189A 
yes §361 paragraph 2 AO 
(General Tax Code) 
YES 

YES 
para (6) of Art. 176/A. of 
Act XCII of 2003 on Tax 
Procedure 
YES 

Law nr.99 of 22 
arch 1993 
YES 
Part 41 of the Taxes 

Austria 

Belgium 

Cyprus 

Czech 
Republic 
Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Italy 

Ireland 

EN 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Latvia 
Lithuania 

In preparation 
NO 
In preparation 

Luxembourg 

YES 

Malta 

YES 
Legal notice 

Netherlands 

YES 
Decree 

Poland 

Portugal 

Slovak 
Republic 
Slovenia 

Spain 

Sweden 

United 
Kingdom 

YES 

YES 

YES 

? 

YES ( 36/2006 
Preamble) 

NO 
In preparation 
YES 

YES 

YES 

Consolidation Act 199724 
YES 
YES 
Chapter 110 of the Law on 
Tax Administration 
No IX-2112 
YES 
Loi générale des impôts 
22/05/1931 § 251 
YES 
Art. 41 of the Income Tax 
Management Act 
YES 
Par. 3.1.8. of Decree No. 
IFZ 2001/295M 
YES  
art. 67a §1 pkt 2 Tax 
Ordinance 
NO 
In 2008 a new legislative 
procedure will provide for 
suspension 
Exceptionally 

NO 
In preparation 
YES  
( l.36/2006 D.A.1ª) 
YES 
Chapter17, paragraph 6 in 
the Tax Collection Act 
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 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 open while an 
alternative procedure for dispute resolution has a prospect of resolving the point at issue. 

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ANNEX X: JTPF PROPOSAL FOR A REVISED CODE OF CONDUCT 

DRAFT REVISED CODE OF CONDUCT FOR THE EFFECTIVE 
IMPLEMENTATION OF THE CONVENTION 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  MEMBER  STATES,  MEETING  WITHIN 
THE COUNCIL,  

HAVING  REGARD  TO  the  Convention  of  23  July  1990,  on  the  elimination  of 
double taxation in connection with the adjustment of profits of associated enterprises 
(the "Arbitration Convention"), 

ACKNOWLEDGING the need both for Member States and taxpayers to have more 
detailed rules to implement efficiently the aforementioned Convention, 

NOTING the Commission communication of on the reports on the interpretation of 
some provisions of the AC and penalties including 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 REVISED 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  certain  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  triangular  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  length  principle  because  an  associated 
enterprise situated in another Member State(s) and identified by both EU Competent 
Authorities  (evidence  based  on  the  comparability  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 

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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 transactions involved in 
triangular cases amongst Member States 

1.2 Thin capitalization25 

The Arbitration Convention makes clear reference 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 length principle are to be considered within 
the scope of Arbitration Convention. 

Reservations on the scope of the AC: Thin Capitalization 

25 
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 does 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 adjustment 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 capitalization 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  within  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  invoked  to  solve  double  taxation  arising  from  adjustments  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 

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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 presented 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  regards  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 are recommended to clarify 
or revise their unilateral statements in Annex of the Arbitration Convention in order 
to better reflect that a serious penalty should only be applied in exceptional 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  meaning  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 concerned, Member States are recommended to 
apply this definition also to the determination 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 treaties between EU Member States.  

5.  The  starting  point  of  the  two-year  period  (Article  7  (1)  of  the  Arbitration 
Convention) 

(i) 

For the purpose of Article 7 (1) of the Arbitration Convention, a case will be 
regarded as having been submitted according to Article 6 (1) when the taxpayer 
provides the following: 

a) 

b) 

identification  (such  as  name,  address,  tax  identification  number)  of  the 
enterprise  of  the  Contracting  State  that  presents  its  request  and  of  the 
other parties to the relevant transactions; 

details  of  the  relevant  facts  and  circumstances  of  the  case  (including 
details of the relations between the enterprise 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 three-year period, since the application of the existing 
Arbitration Convention should be limited to those cases where there is a transfer pricing ‘adjustment’. 

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d) 

e) 

f) 

g) 

h) 

copies  of  the  tax  assessment  notices,  tax  audit  report  or  equivalent 
leading to the alleged double taxation; 

details of any appeals and litigation procedures initiated by the enterprise 
or  the  other  parties  to  the  relevant  transactions  and  any  court  decisions 
concerning the case; 

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; 

an  undertaking  that  the  enterprise  shall  respond  as  completely  and 
quickly as possible to all reasonable and appropriate requests made by a 
Competent  Authority  and  have  documentation  at  the  disposal  of  the 
Competent Authorities; and 

any  specific  additional 
Authority within two months upon receipt of the taxpayer’s request. 

information  requested  by 

the  Competent 

(ii)  The two-year period starts on the latest of the following dates: 

a) 

b) 

the  date  of  the  tax  assessment  notice,  i.e.  a  final  decision  of  the  tax 
administration on the additional income, or equivalent; 

the date on which the Competent Authority 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 applied, 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 particular case in question. 

c)  Any  appropriate  means  for  reaching  a  mutual  agreement  as  expeditiously  as 
possible, 
including  face-to-face  meetings,  will  be  considered;  where 
appropriate,  the  enterprise  will  be  invited  to  make  a  presentation  to  its 
Competent Authority. 

d) 

Taking into account the provisions of this Code, a mutual agreement should be 
reached within two years of the date on which the case was first submitted to 
one of the Competent Authorities in accordance 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 transactions, or triangular cases) it may be 
appropriate  to  apply  Article.  7(4)  (extending  time  limits)  to  agree  a  short 
extension. 

e) 

The  mutual  agreement  procedure  should  not  impose  any  inappropriate  or 
excessive compliance costs on the person requesting it, or on any other person 
involved in the case. 

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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 arising from an EU triangular cases under 
the Arbitration Convention. 

1. 

2. 

Competent  Authorities  can  decide  to  take  a  multilateral  approach 
(immediate  and  full  participation  of  all  Competent  Authorities 
concerned); or 

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  Agreement  Procedure  discussions.  The 
two  parties  of  the  bilateral  procedure  being  the  Competent  Authorities 
having  identified  (based  on  the  comparability  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  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  and  should  invite  the  respective  other  EU 
Competent Authority (ies) to participate as (an) observer(s) to the Mutual 
Agreement Procedure discussions. 

Considering  the  pros  and  cons  of  the  above  approaches  Member  States  are 
recommended to apply 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  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 application or as (an) observer(s). 

b)  As soon as Contracting States Competent Authorities have agreed that the case 
under  discussion  is  to  be  considered  a  EU  triangular  case  they  should 
immediately  invite  the  other  EU  Competent  Authority(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  approach  .  To  that  extent  all 
information  should  be  shared  with  the  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  Arbitration  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 Competent Authority (ies) want(s) to participate in the 
proceedings of the second stage (arbitration), it (they) has (have) to become (a) 
stakeholder(s). 

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If  the  other  EU  Competent  Authority  (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 provisions 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 Convention procedure. 

In the process any exchange of information must comply with the normal legal 
and administrative requirements and procedures. 

d) 

The  taxpayer(s)  should,  as  soon  as  possible,  inform  the  tax  administration(s) 
involved  that  (an)  other  party(ies),  in  (an)  other  Member  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 resolution but also guard against the non 
resolution  of  double  taxation  issues  by  virtue  of  differing  Member  States` 
procedural deadlines. 

6.3 Practical functioning and transparency  

a) 

b) 

c) 

d) 

e) 

In  order  to  minimise  costs  and  delays  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.  

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. 

The confidentiality of information relating to any person that is protected under 
a  bilateral  tax  convention  or  under  the  law  of  a  Contracting  State  will  be 
ensured. 

The Competent Authority will acknowledge receipt of a taxpayer’s request to 
initiate a mutual agreement procedure within 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.  

If  the  Competent  Authority  believes  that  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  provide  it  with  the  specific  additional 
information it needs. 

f) 

Contracting States undertake that the Competent Authority will respond to the 
enterprise making the request in one of the following forms:  

(i) 

if the Competent Authority does not believe that profits of the enterprise 
are included, or are likely to be included, in the profits of an enterprise of 

EN 

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(ii) 

(iii) 

another Contracting State, it will inform the enterprise of its doubts and 
invite it to make any further comments; 

if the request appears to the Competent 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; 

if the request appears to the Competent Authority to be well-founded but 
it  is  not  itself  able  to  arrive  at  a  satisfactory  solution,  it  will  inform  the 
enterprise that it will endeavour to resolve the case by mutual agreement 
with the Competent Authority of any 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 decision 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  Convention  that  it  has  initiated  the  mutual 
agreement  procedure.  The  Competent  Authority 
the  mutual 
agreement procedure will also inform - on the basis of information available to 
it  -  the  Competent  Authority  of  the  other  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 Arbitration Convention and of the starting 
point for the two-year period of Article 7 (1) of the Arbitration Convention.  

initiating 

6.4 Exchange of position papers 

a) 

Contracting States undertake that when a mutual agreement procedure has been 
initiated,  the  Competent  Authority  of  the  country  in  which  a  tax  assessment, 
i.e. a final decision of the tax administration 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 States involved in the 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 with a view to the elimination of double 

taxation together with a full explanation of the proposal. 

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. 

The  position  paper  will  be  sent  to  the  Competent  Authorities  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: 

b) 

c) 

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i) 

ii) 

the  date  of  the  tax  assessment  notice,  i.e.  final  decision  of  the  tax 
administration on the additional income, or equivalent; 

the date on which the Competent Authority receives the request and the 
minimum information as stated under point 5 (i). 

d)  Contracting States undertake that, where 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  Arbitration  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) 

(ii) 

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 Competent Authority (ies) accordingly and 
make such adjustments or allow such relief as quickly as possible; 

if  the  Competent  Authority  does  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 will send a responding position paper to 
the other Competent Authority (ies) setting out its reasons 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  take  place  no  later  than  18  months 
from the latest of the following dates: 

aa) 

the date of the  tax assessment notice, 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 appropriate 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 concerned, 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 OECD  Model  Convention  on  Income  and  on 
Capital, implemented in the Double tax treaties between Member States. 

7. Proceedings during the second phase of the Arbitration Convention 

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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,  eligible  to  become  a  Member  of  the 
advisory  commission  as  referred  to  in  Article  7  (1)  of  the  Arbitration 
Convention and inform, under the same conditions, 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  vitae  of  those  persons,  which  should,  among  other 
things, describe their legal, tax and especially transfer pricing experience.  

c) 

d) 

e) 

f) 

Contracting States may also indicate on their list those independent persons of 
standing who fulfil the requirements to be elected as Chairman. 

The  Secretary  General  of  the  Council  will  address  every  year  a  request  to 
Contracting  States  to  confirm  the  names  of  their  independent  persons  of 
standing and/or give the names of their replacements. 

The aggregate list of all independent persons of standing will be published on 
the Council’s web-site. 

Independent  persons  of  standing do not have to be nationals of or resident in 
the nominating state but nationals of a contracting state and resident within the 
territory to which the Arbitration 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 independent persons of standing. 

7.2 Establishment of the advisory commission  

a)  Unless  otherwise  agreed  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 taxation within the meaning of Article 1 of the 
Arbitration Convention, takes the initiative for the establishment of the advisory 
commission  and  arranges  for  its  meetings,  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  Competent  Authority  does  not  take  the 
necessary actions another Competent Authority 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 and the representatives of the Competent 
Authorities. For triangular cases, where an advisory commission is to be set up 
under the multilateral approach, the Contracting States will have regard to the 
requirements  of  Article  11(2)  of  the  Arbitration  Convention,  introducing  as 

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necessary  additional  rules  of  procedure, 
the  advisory 
commission, inclusive of its Chairman, is able to adopt its opinion by a simple 
majority of its members. 

to  ensure 

that 

d) 

e) 

f) 

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  commission  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  Secretariat  will  be  bound  by  the  secrecy 
provisions as stated in Article 9 (6) of the Arbitration Convention. 

The place where the advisory commission 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. 

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) 

c) 

The  proceedings  of  the  advisory  commission  will  be  conducted  in  the  official 
language or languages of the Contracting States involved, unless the Competent 
Authorities  decide  otherwise  by  mutual  agreement,  taking  into  account  the 
wishes of the advisory commission. 

The advisory commission may request from 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 Article 10 of the Arbitration Convention, the 
advisory  commission  may  request  the  Contracting  States  and  in  particular  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 resulted or 
may result in double taxation within the meaning 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  the  Contracting  States  concerned  agree 
otherwise: 

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i) 

ii) 

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; 

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  Competent  Authorities  of  the  Contracting 
States concerned decide 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; the 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) 

f) 

g) 

h) 

the opinion; 

the place where the opinion is delivered; 

the date on which the opinion is delivered; 

the signatures of the members of the advisory commission. 

The decision of the Competent Authorities and the opinion of the advisory commission 
will be communicated as follows: 

i) 

ii) 

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. 

The  Competent  Authorities  of  the  Contracting  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  without  mentioning  the  names  of  the 

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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  Competent  Authority  to  whom  the  case  was 
presented  that  they  do  not  have  objections  to  publication  of  the  decision  and 
the opinion.  

iii)  The  opinion  of  the  advisory  commission  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  Contracting  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  during  cross-border  dispute  resolution 
procedures  under  the  Arbitration  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 
procedures under double tax treaties between Member States. 

b)  Considering that during Mutual Agreement Procedure negotiations 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 repaid 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 Mutual 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 after 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 Commission on its practical functioning 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. 

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