Elimination of double taxation

Table of Contents:

Elimination of double taxation

Outline of the Community (European Union) legislation about Elimination of double taxation

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Taxation

Elimination of double taxation (arbitration)

Document or Iniciative

Convention 90/436/EEC on the elimination of double taxation in connection with the adjustment of transfers of profits between associated undertakings.

Summary

There is at present no formal obligation on Member States to eliminate double taxation (bilateral conventions merely require the parties to make every effort to do so).

When double taxation arises, the firm affected presents its case to the tax authorities concerned; if those authorities cannot solve the problem satisfactorily, they endeavour to reach mutual agreement with the authorities of the Member State where the associated firm is taxed.

If no agreement can be reached, the authorities present the case to an advisory commission, which suggests a way of solving the problem.

Although the tax authorities may subsequently adopt, by mutual agreement, a solution different from that suggested by the advisory commission, they are bound to adopt the commission’s advice if they cannot reach agreement.

The commission consists of a chairman, two representatives from each of the tax authorities concerned, and an even number of independent members.

On 21 December 1995 the Council adopted a Convention on the accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden to the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises. The Convention allows Austria, Finland and Sweden to accede to the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises following their accession to the European Union. This Convention will come into force, between the States which have ratified it, on the first day of the third month following the deposit of the last instrument of ratification by the Republic of Austria, the Republic of Finland or the Kingdom of Sweden and by one State which has ratified the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises. It enters into force for each Contracting State which subsequently ratifies it on the first day of the third month following the deposit of its instrument of ratification.

On 25 May 1995 the Council adopted a Protocol amending Convention 90/436/EEC extending it for further periods of five years at a time. The Protocol enters into force on the first day of the third month following the deposit of the instrument of ratification, acceptance or approval by the last Contracting State complying with this formality. It entered into force on 1 January 2000.

As not all Member States have ratified the Protocol extending the Arbitration Convention, the Convention ceased to have effect in 2000. Consequently, enterprises can currently only avail of the dispute settlement provisions of double taxation conventions which do not impose any binding obligation to eliminate double taxation, unlike the Arbitration Convention.

References

Act Entry into force Deadline for transposition in the Member States Official Journal
Convention 90/436/EEC 1.1.1995 OJ L 225 of 20.8.1990

Related Acts

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 field of dispute avoidance and resolution procedures and on Guidelines for Advance Pricing Agreements within the EU [COM(2007) 71 final – Not published in the Official Journal].

Resolution of the Council and of the representatives of the governments of the Member States, meeting within the Council, of 27 June 2006 on a code of conduct on transfer pricing documentation for associated enterprises in the European Union [Official Journal C 176 of 28.7.2006].

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 on transfer pricing documentation for associated enterprises in the EU [COM(2005)543 – Not published in the Official Journal].

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 Form in the field of business taxation from October 2002 to December 2003 and on a proposal for a Code of Conduct for the effective implementation of the Arbitration Convention (90/436/EEC) [COM(2004) 297 – Not published in the Official Journal].

The Commission proposes that a Code of Conduct be adopted to ensure more effective and more uniform implementation of the 1990 Arbitration Convention by Member States to eliminate double taxation of enterprises carrying out intergroup operations. The Code of Conduct proposed is the result of work by the EU Joint Transfer Pricing Form. The Commission also intends to adopt procedural rules (concerning the starting points for the periods for dealing with complaints, the procedural rules of the advisory commission to be drawn up by the Member States if no agreement can be reached on the elimination of double taxation within two years and the suspension of tax collection pending dispute settlement) and recommends that the Member States apply these rules to the dispute settlement provisions of their bilateral double taxation agreements.

1 thought on “Elimination of double taxation

  1. andrew evreou

    Hello, I have moved to Madeira(Portugal) in 2012 from the UK. I have rental property in the UK, in which I pay income Taxes in the UK. The Portuguese Tax Authorities are forcing me to pay my Taxes from my property income in the UK to the Portuguese Tax Authorities from 2017 onward. They started to say that my Taxes from 2017 had not been paid in the UK. I had showed them proof from the HRMC that it had been paid. They would not accept it. finally they accepted it. Although they accepted it, they still want me to pay my Taxes here in Madeira as well. I have told them that there is a Double Tax treaty with the UK and Portugal they did not want to know. I have hired a Portuguese accountant to help me. He has told me to get an Certificate of Residence for Tax Purposes from the UK. I had got the Certificate, the accountant showed them they accepted it for the years 2017 & 2018 as for the further years I am still waiting for them. When accountant had submitted the certificate to the Tax Authorities they said that they can not accept it as it has passed the deadline. The accountant contested It saying that the Portuguese Tax Authorities Lawyer had previously accept it.. seams to me that the Portuguese Tax Authorities make their own Laws and Rules.
    If you can please assist me with this matter I would very much appreciate. Please let me know.

    Reply

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