By Ninja-Antonia Reggelin
The German finance ministry on April 16 published a draft law providing a scheme for resolving instances of double taxation within the European Union.
The draft implements EU Council Directive 2017/1852 of October 10, 2017, providing a uniform mechanism to address tax treaty disputes among EU member states that meets the BEPS Action 14 minimum standard. The directive is to be transposed into national law by the EU member states by 30.06.2019.
The German draft law closely follows the EU directive’s approach, introducing a three-stage dispute resolution procedure to eliminate double taxation conflicts within the EU.
As far as possible, the same terminology is used to prevent subsequent questions of interpretation. The draft law, however, uses a different sorting and structuring.
The German draft law is divided into eight chapters, following the chronological order of the new procedure rather than following the EU’s systematics in broad terms. According to the ministry, this ensures better comprehensibility for the German law user and a system adapted to the German legal system should be achieved.
The taxpayer has three years to lodge a complaint following the first notification of double taxation. If all participating member states agree that double taxation exists, a consensual agreement must be reached within two years (mutual agreement phase).
Otherwise, an advisory committee will be set up to recommend a double taxation solution within six months (dispute settlement phase). The same applies if at least one member state does not reject the complaint. If member states fail to appoint the advisory committee in due time, the taxpayer may request this in court.
The competent authorities finally decide how to resolve the issue. They may also deviate from the opinion of the advisory committee. If the affected states fail to reach a decision within six months, the complaint is considered accepted and the agreement phase. The final decision is binding on the Member States concerned but has no precedent.
The new procedure should be applied to all dispute settlement complaints filed on or after July 1 on issues related to income or assets generated in a tax year beginning on or after January 1, 2018. Competent authorities of EU member states may agree to apply the directive to cases submitted earlier or to earlier tax years.
Ninja-Antonia Reggelin
Ninja-Antonia Reggelin is based in Berlin, where she is head of tax policy at a business association.
She previously worked at the OECD, contributing to the project that led to the publication of the BEPS Action Plan. Prior to that, she was with PwC Germany, where she focused on international tax structuring.
Ninja holds a Master’s degree (LL.M.) in International Trade Law from Bond University Australia and a Master’s degree (M.A.) in International Relations from the University of Kent Brussels School of International Studies.
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