In particular, Article 19 of the compulsory arbitration procedure must be mandatory if the competent authorities are unable to reach an agreement on the settlement of a case within two years of their start. This is a significant restriction on POPs cases in the past, as the competent authorities were only required to try to resolve cases and disputes could be resolved indefinitely. Section 19 ensures that treaty disputes will be resolved within a specified time frame, making the MAP a more attractive option for taxpayers. In addition, sections 20 to 25 provide for the practical functioning of arbitration. In the past, it was often practical constraints or a lack of agreement on how to proceed that blocked the solution. Within the EU, the EU Arbitration Convention came into force on 1 January 1995 as an instrument that promised to allow the elimination of double taxation between Member States. It is important that it provides for a binding and binding arbitration mechanism that eliminates double taxation, with the advice of an independent advisory body, if the competent authorities fail to reach an agreement after two years. This went beyond the existing bilateral agreements at the time, which simply required the competent authorities to make their “best efforts” to eliminate double taxation. Jen is director of the London TP team and works on complex TP issues for a large number of clients. In addition to designing and supporting robust strategies, she maintains close working relationships with HMRC`s specialized MAP and APA team, has assisted in the effective negotiation of several APAs for Deloitte, and has decided to double taxation by many LDCs. This online manual on effective agreement procedures (MEMAP) is part of a larger project to improve the functioning of existing international tax procedures and develop additional dispute resolution mechanisms. For more information on the project, the proposed complementary dispute resolution mechanism and other proposed improvements under the Mutual Agreement Procedure (MAP), see www.oecd.org/ctp/memap dispute resolution. In addition to these developments, taxpayers in EU Member States have benefited from the benefits of the EU Arbitration Convention.
The agreement, which was a landmark at the time of its drafting in 1990, has benefited from a series of updates drawn up by the EU Joint Forum on Transfer Prices and has been anchored in the EU`s Soft-Law by various codes of conduct adopted by EU Member States. However, the convention has always been agitated in the EU canon and has not been an EU regulatory instrument. This fundamental problem was addressed in 2019 by the European Arbitration Directive, a more formal and extensive instrument than the Convention, which effectively replaces it. In view of these gaps in 2017, the Council of the EU has adopted the 2017/1852 Directive on tax conflict mechanisms in the EU, in order to enable a faster and more effective settlement of tax disputes between Member States. Under the Arbitration Directive, the procedure for submitting a case (called a “claim”) is similar to that of the arbitration agreement. However, it corrects many shortcomings of the agreement: the objective of BEPS Action 14 was to find solutions to remove barriers preventing countries from addressing contractual disputes under the POP, including the absence of arbitration provisions in most contracts, and the fact that access to POPs and arbitration may be denied in some cases. In its 2015 final report, “Dispute Resolution Mechanisms for the Application of Dispute Resolution Mechanisms” (final report), the OECD highlighted the fundamental importance of the map mechanism for the proper application and interpretation of tax treaties, the development of minimum standards for dispute resolution and a series of recommendations on best practices.