REPORT FROM THE COMMISSION TO THE COUNCIL Implementation report on the review of the DRM Directive
Date: 2024-10-28
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: EU Member State, European tax cooperation, application of EU law, approximation of laws, arbitration, double taxation, tax convention, tax law, tax on capital, tax on income

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.10.2024  COM(2024) 494 final  REPORT FROM THE COMMISSION TO THE COUNCIL Implementation report on the review of the DRM Directive  
 
 
1.  Introduction 

Council  Directive  (EU)  2017/1852  of  10  October  2017  on  tax  dispute  resolution 
mechanisms  in  the  European  Union1  (‘DRM  Directive’)  sets  out  a  framework  to 
resolve disputes between Member States arising from the interpretation and application 
of agreements and conventions between Member States that provide for the elimination 
of double taxation of income and, where applicable, capital.  

Although before the adoption of the DRM Directive mechanisms or instruments were 
available to resolve certain disputes provided for under tax treaties or the Arbitration 
Convention  (90/436/EEC)2,  these  instruments  might  not  achieve  the  effective 
resolution of such disputes in all cases in terms of scope and/or in a timely or binding 
manner.    

The  DRM  Directive  ensures  an  effective  mechanism  to  resolve  disputes  covering  a 
wider scope, in a timely and enforceable manner by envisaging a three-step approach. 
First,  any  person  (individual  or  company)  whose  taxation  is  directly  affected  by  a 
question  in  dispute  is  entitled  to  submit  a  complaint  to  each  of  the  Member  States 
concerned,  requesting  the  resolution  of  such  dispute.  Second,  the  Member  States 
concerned should then endeavour to resolve the question in dispute through a mutual 
agreement procedure. Third, in case of rejection of the complaint by a Member State 
or  failure  in  resolving  a  dispute  during  the  mutual  agreement  procedure  stage,  the 
Directive envisages the establishment of an advisory commission to take a decision on 
the rejection or issue an opinion on the dispute.  

In accordance with Article 21 of the DRM Directive the Commission shall evaluate 
the  implementation  of  the  Directive  and  present  a  report  to  the  Council.  However, 
limited evidence is currently available on the application of the Directive and not all 
Member States have obtained sufficient experience with applying its rules. None of the 
Member  State  have  complaints,  submitted  by  the  taxpayers,  that  have  reached  the 
dispute resolution stage. The main reason is that the DRM Directive applies to tax years 
commencing  on  or  after  1  January  2018.  Member  States  have  different  compliance 
rules in terms of filing requirements and finalising assessments, statute of limitation 
rules and compliance strategies (e.g. when to start an audit or which tax years to cover). 
For example, the tax return for the tax year 2018 would be filed at the earliest in 2019. 
A tax audit covering the tax year 2018 might only be closed in 2023, thus a complaint 
could  be  filed  from  then  on  and  within  3  years  (at  the  latest  in  2026).  As  a  result, 
disputes that could be dealt with under the DRM Directive have only started to arise in 
the most recent years.  

This implementation report covers the period from the initial entry into force of the 
DRM Directive to date. It is based on data gathered through a consultation which ran 
from 12 March to 10 May 2024 on the website of the Commission services responsible 
for Taxation and Customs Union as well as input received from Member States under 
the Statistical Framework for the DRM Directive for the tax years 2020-2023 and a 
targeted consultation to Member States which ran from 14 March to 10 May 2024. A 
fully-fledged  evaluation  of  the  DRM  Directive  should  be  conducted  once  more 

1  OJ L 265, 14.10.2017, p. 1–14 

2  Convention on the elimination of double taxation in connection with the adjustment of profits of 

associated enterprises OJ L 225, 20/08/1990, p. 10. 

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information on and experience with real cases is available, including with cases that 
have reached the dispute resolution stage. The DRM Directive is also within the scope 
of an ongoing ECA audit on harmful tax competition in the EU. 

2.  Description of the DRM Directive 

The DRM Directive offers a coordinated and flexible framework for Member States 
and reinforces mandatory binding dispute resolution in the European Union compared 
to  purely  national  rules  and/or  rules  set  in  bilateral  or  multilateral  agreements  and 
conventions.  

It allows for a mutual agreement procedure (‘MAP’) initiated by a complaint of the 
taxpayer under which the Member States must cooperate and reach an agreement on 
the double taxation dispute within 2 years. The decision is binding on the competent 
authorities  and  enforceable  by  the  affected  taxpayer(s).  If  the  MAP  fails  because 
Member States have not managed to reach to an agreement, it automatically leads to a 
dispute resolution  procedure  (arbitration phase)  with  the issuance of a final  binding 
decision by the competent authorities of the Member States involved. 

The figure below summarises the three key procedural stages of the DRM Directive: 

Complaint stage 

Mutual Agreement Procedure

Dispute resolution stage

(article 3)

(article 4)

(articles 5-16)

Figure 1: Three key procedures 

Summary of each step: 

1. Complaint  

The DRM Directive applies to disputes between Member States arising from different 
interpretations  and  applications  of  agreements  and  conventions  that  provide  for  the 
elimination  of  double  taxation  of  income  and,  where  applicable,  capital,  such  as 
bilateral tax treaties and the Arbitration Convention, leading to double taxation. In light 
of this, any affected person, including individuals, is entitled to submit a complaint on 
a  question  in  dispute  to  each  of  the  competent  authorities  of  the  Member  States 
concerned with the aim of a resolution.  

The deadline for the submission is 3 years from the receipt of the first notification of 
the  action  resulting  in  double  taxation.  Each  Member  State’s  competent  authority 
concerned is obliged to acknowledge receipt of the complaint within 2 months from its 
receipt and inform the other concerned Member States thereof. The affected person is 
required to submit information according to Article 3(3) of the DRM Directive. The 
competent authorities concerned may request additional information within 3 months 
from the receipt of the complaint. In turn, the affected person needs to reply within 3 
months  of  receiving  the  request.  The  decision  on  the  acceptance  or  rejection  of  the 
complaint has to be taken within 6 months of the receipt thereof or within 6 months of 
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the receipt of additional information, whichever is later, and the affected person and 
the competent authorities of the other concerned Member States have to be informed 
thereof without delay. 

Within this 6-month period, the concerned Member State may resolve the question in 
dispute on a unilateral basis, resulting in the closure of the procedure under the DRM 
Directive. 

2. MAP 

If  the  dispute  has  not  been  resolved  under  the  complaint  stage,  the  Member  States 
concerned,  where  they  have  accepted  a  complaint,  enter  into  a  mutual  agreement 
procedure. In case of a mutual agreement procedure, Member States must endeavour 
to conclude it within 2 or 3 years starting from the last notification of the decision to 
accept the complaint. 

Recital 6 encourages Member States to use alternative non-binding dispute resolution 
options,  such  as  mediation  or  conciliation,  during  the  final  stages  of  the  mutual 
agreement  procedure  period.  If  Member  States  concerned  are  able  to  resolve  the 
dispute, the decision becomes binding on the Member States subject to the taxpayer(s)’ 
agreement  and  renouncing  the  right  to  any  other  remedy.  In  the  absence  of  an 
agreement within the indicated time frame, the case should be submitted to a dispute 
resolution procedure. 

3. Dispute resolution 

The  affected  person  may  request  the  competent  authorities  to  set  up  an  advisory 
commission where, (a) the complaint submitted by such affected person was rejected 
under article 5(1) by at least one, but not all of the competent authorities of Member 
States concerned; or (b) the competent authorities of the Member States concerned had 
accepted the complaint that was submitted by the affected person but failed to reach an 
agreement on how to resolve the question in dispute by mutual agreement within the 
time limit provided for in article 4(1), in which case the advisory commission must 
deliver  an  opinion  on  how  to  resolve  the  question  in  dispute.  The  DRM  Directive 
allows flexibility to Member States to set up an advisory commission that may differ 
regarding  composition,  form,  arbitration  process  to  be  used  and/or  might  be  of  a 
permanent nature. 

The advisory commission must deliver its opinion to the competent authorities of the 
Member States concerned no later than 6 months, which can be extended by another 3 
months, after the date on which it was set up. The opinion is taken on the basis of a 
simple majority of its members. Where a majority cannot be reached, the vote of the 
chair  shall  determine  the  final  opinion  and  be  communicated  to  the  competent 
authorities. 

A  final  decision  needs  to  be  taken  by  the  competent  authorities,  following  the 
notification  of  the  opinion  of  the  advisory  commission.  The  competent  authorities 
concerned have 6 months to agree on how to resolve the question in dispute. During 
these 6 months, the competent authorities may make a deviating decision compared to 
the one provided by the advisory commission. 

The final decision is binding on the Member States concerned in relation to the affected 
persons  and  does  not  constitute  a  precedent.  It  must  be  implemented  subject  to  the 
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affected person(s) accepting the final decision and renouncing the right to any domestic 
remedy  within  60  days  from  the  date  when  the  final  decision  was  notified,  where 
applicable. 

3.  Overview of the implementation 

a.  Transposition checks 

All Member States have now correctly transposed the DRM Directive. In the case of 
Spain, an infringement procedure for an incorrect transposition was launched3. Spain 
has subsequently addressed the issues raised in the infringement procedure, which was 
closed on 23 May 20244. 

b.  Review of Statistical Framework 

Under the Statistical Framework for the DRM Directive, Member States are required 
to submit on an annual basis the following statistics to the Commission5: 

(i)   Complaints submitted to the competent authority. 
(ii)  MAPs being administered by the competent authority. 
(iii) Complaints  being  handled  under  the  dispute  resolution  stage  (arbitration 

phase). 

(iv)  The implementation of MAP Decisions and Final Decisions. 

The  following  table  indicates  the  number  of  cases  under  (i)  and  (ii)  submitted  by 
Member States that are pending at the end of each reporting year: 

Evolution of No. of Pending Complaints and MAP's under 
DRM

250

200

150

100

50

0

2020

2021

2022

2023

Pending Complaints

Pending MAP's

Complaints submitted 

Depending on the position taken by the competent authorities of a concerned Member 
State regarding the submitted complaint, taxpayers may have to file an appeal to the 

3 INFR(2022)2096 
4 See  Commission’s Public Registry of Infringement Decisions  https://ec.europa.eu/atwork/applying-

eu-law/infringements-proceedings/infringement_decisions/?lang_code=en 

5 See for the data the Commission website: Resolution of tax disputes in the European Union - European 

Commission (europa.eu) 

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national courts under Article 5(3) to gain access to the MAP or the dispute resolution 
stages of the DRM. Based on the information received from Member States, there is 
only one appeal submitted in relation to a rejection made by 2 Member States. The low 
number  of  complaints  under  appeal  relative  to  the  total  number  of  complaints 
submitted  might  indicate  that  the  number  of  cases  that  have  been  rejected  by  all 
Member States are low up until now.  

Instead, any disputes that remain at the complaint stage are passed to the MAP stage. 
One key statistical indicator is the average time for a complaint to be closed by the 
Member States submitted either through the complaint being resolved by the Member 
States or being passed to the MAP stage or dispute resolution stage. The results for 
years 2020-23 are indicated below. 

Year 

2020 
2021 
2022 
2023 

Number of MS 
reporting 
2 
6 
12 
11 

Complaint closed (in months) 
– EU average 
1.25 
4.1 
3.9 
3.9 

Maximum 
(months) 
1.5 
12 
6.2 
6 

Minimum 
(months) 
1 
0.2 
1.8 
0.8 

Therefore, based on data submitted by Member States, a large majority of cases are 
being closed by Member States within 6 months as required by the DRM Directive. 
Going  forward  data  submission  of  time  taken  to  close  a  complaint  is  essential  to 
monitor the effectiveness of the DRM Directive.  

Complaints handled under the MAP stage 

Although the number of both complaints and MAPs has increased during the period 
2020-2023, they remain significantly below the number of MAPs currently under the 
Arbitration  Convention  for  the  same  time  period6.  There  may  be  several  reasons  to 
explain this low number. The DRM Directive is only directly applicable for disputes 
arising as from a tax year commencing on or after 1 January 2018, therefore older cases 
cannot be handled under the DRM Directive7. Nevertheless, there has been a decrease 
in the number of disputes submitted under the Arbitration Convention: the number of 
cases submitted in 2023 under the Arbitration Convention has decreased to 649 from 
854 in 2022. However, this may just be a temporary effect with data from future years 
required to confirm a long-term trend.   

Further, given the time it takes to undertake an audit and to issue a final audit decision 
to  the  taxpayer,  a  number  of  years  would  elapse  before  the  taxpayer  would  be  in  a 
position to submit a complaint. Finally, the taxpayer has three years as from the date 
the decision has been issued to lodge a complaint, therefore this could also explain the 
time  lapse  between  the  occurrence  of  a  dispute  and  its  submission  under  the  DRM 
Directive.  

6  MAP  and  APA  statistics:  https://taxation-customs.ec.europa.eu/taxation/statistics-apas-and-maps-

eu_en  

7 Member States could have used the possibility to accept cases in relation to disputes arising before 1 
January 2018 covering earlier tax years. In the consultation with Member States, only two Member 
States have indicated to allow for this.  

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When asked in the Member States’ consultation whether they have noticed a shift to 
the DRM Directive from the Arbitration Convention, most Member States responded 
that they did not have data to answer the question. They confirmed that the Arbitration 
Convention is still being used by their taxpayers.  

As with the complaint stage, Member States were requested to indicate the number of 
months  it  takes  to  resolve  a  dispute  under  the  MAP  procedure8.  The  results  for  the 
years 2020 to 2023 are indicated below.  

Year  Number of MS 
reporting 

2020  N/A 
2021  4 
2022  2 
2023  9 

Map closed (in months) – 
EU average 
N/A 
7 
9.3 
10.9 

Maximum 
(months) 
N/A 
12.5 
10.1 
21.5 

Minimum 
(months) 
N/A 
3.3 
8.5 
3 

Based on data submitted by Member States, MAP cases are being  closed within 24 
months,  as  required  under  the  DRM  Directive.  However,  given  the  low  number  of 
cases actually being closed under the MAP stage so far, it would be premature to draw 
conclusions. A targeted consultation with a Member State indicated that most of the 
cases submitted under the DRM Directive were from individuals which normally can 
be  resolved  more  quickly  in  contrast  to  disputes  involving  companies.  The  latter 
generally involves transfer pricing disputes which are more complex and require more 
time to resolve. As with the complaint phase, it is essential that data is submitted by 
Member States to allow effective monitoring regarding the timeliness to close a MAP 
case.  

Complaints being handled under the dispute resolution stage 

So far, no complaints have advanced to the dispute resolution stage (arbitration phase), 
therefore it is not possible to assess it. Further, given that the majority of MAP cases 
have  been  submitted  in  2022  and  2023  and  not  all  decisions  have  been  issued  by 
Member States, it is expected the number of cases that would be passed to this stage 
will be limited in the coming years. Nevertheless, monitoring of this phase is essential 
to ensure that taxpayers have a right to challenge the rejection of a MAP case. 

The implementation of MAP Decisions and Final Decisions 

Member  States  are  required  to  report  the  number  of  MAP  Decisions  and  Final 
Decisions not yet implemented by the competent authorities. 

As of 31 December 2023, Member States reported having three MAP decisions that 
still needed to be implemented by the competent authorities.  

8 Number of complaints accepted to proceed to a MAP under Article 4 (1) during the reference year and 
the  number  of  MAP  decisions  accepted  by  the  affected  person  under  Article  4  (2)  during  the 
reference year are shown in the statistical data at the Commission’s website referred in footnote 5. 

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c.  Preliminary feedback on the application 

According to the results of the consultation undertaken with Member States and the 
consultation  conducted  with  stakeholders9,  the  DRM  Directive  does  provide  for  an 
improvement in terms of efficiency and effectiveness compared to the situation before 
its implementation. This stems from the fact that the DRM Directive provides for clear 
and defined timelines, it offers improved opportunities for recourse for the taxpayer(s) 
and  has  a  broader  scope  covering  not  only  disputes  regarding  transfer  pricing  or 
attribution of profits to permanent establishment but any dispute that arises from the 
interpretation  and  application  of  agreements  and  conventions  that  provide  for  the 
elimination of double taxation of income.  

However, both Member States and stakeholders indicated in their responses that the 
experience with the rules of the DRM Directive is limited as the first cases of double 
taxation  that  fall  under  the  scope  of  the  DRM  Directive  are  only  now  emerging, 
because of the closing of tax audits covering tax years commencing on or after 2018. 
So, limited or no feedback could be provided on all the aspects of the DRM Directive 
and more specifically on the dispute resolution stage as, at the time of writing of this 
report, no advisory commission was set up. 

Nevertheless, suggestions were already made to further improve certain aspects of the 
DRM  Directive  in  terms  of  providing  further  clarity  on  the  interpretation  and 
application of certain rules or definitions to ensure a common approach. It was further 
suggested  to  extend  the  scope  of  the  DRM  Directive  and  to  use  the  resolution 
mechanism to resolve disputes related to other directives in the direct and indirect tax 
area. A revised statistical framework by indicating the number of complaints submitted 
and  rejected  during  the  reference  year  might  prove  to  be  useful  for  monitoring 
purposes. 

4.  Conclusions and future work  

All  Member  States  have  fully  implemented  the  DRM  Directive.  The  preliminary 
feedback is positive in that the DRM Directive seems to meet the objectives that were 
set  at  the  time  of  the  adoption.  The  DRM  Directive  provides  for  a  mechanism  for 
dispute  resolution  that  is  comprehensive,  effective  and  sustainable.  The  enhanced 
position of the taxpayer(s) to have the double taxation resolved in a binding manner 
contributes to a fairer tax environment. 

However,  based  on  the  statistical  data  collected  by  the  Commission  under  the 
Statistical Framework for the DRM Directive and the feedback received both from the 
public  and  the  Member  States,  the  conclusion  drawn  is  that  there  is  still  limited 
experience  with  the  application  of  the  DRM  Directive.  Once  more  experience  is 
acquired, the Commission services should carry out a fully-fledged evaluation and, if 
appropriate, make proposals to improve the DRM Directive. 

9 See: Resolution of tax disputes in the European Union - European Commission (europa.eu)  

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