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Applying for mutual agreement and arbitration proceedings under the EU Arbitration Commission

Service Description

The aim of mutual agreement procedures is to

  • protect the taxpayer's right to taxation in accordance with the Convention and
  • avoid double taxation.

In principle, companies must submit the application in their country of residence. In the case of a permanent establishment, the application can also be submitted in its country of residence.
A mutual agreement procedure will only be initiated if your application

  • is admissible and justified and
  • double taxation cannot be remedied unilaterally.

The mutual agreement procedure is used to clarify the tax claims of the states involved that have double-taxed income. The parties to the mutual agreement procedure are therefore solely the contracting states involved. As the applicant, you are not involved in the procedure yourself. However, they are regularly informed about the status and progress of the procedure. In the vast majority of cases, an agreement is reached between the states.
If the mutual agreement procedure between the authorities involved from 2 (or more) contracting states has not led to the elimination of your double taxation within 2 years of the mutual agreement procedure being initiated, arbitration proceedings can be initiated upon request.

For this purpose, an Advisory Committee is formed, which usually consists of the following persons:

  • 1 independent chairperson,
  • 1 representative of each of the competent authorities and
  • an even number - usually 2 - of independent persons.

They have the opportunity to comment on the factual and legal situation to the Advisory Committee.
After completing its work, the Advisory Committee issues an opinion. The competent authorities of the contracting states involved in the case now have time to reach an agreement. They may deviate from the opinion of the Advisory Committee, provided that double taxation is avoided. If they cannot agree on a deviating regulation, they are bound by the opinion of the Advisory Committee as an arbitration award.
At the end of the arbitration proceedings, your double taxation can be eliminated if the taxpayers involved agree to the solution and declare a waiver of the right to appeal (see the explanations under "Procedure").

In Germany, the Federal Central Tax Office (BZSt) is the authority responsible for initiating mutual agreement procedures.
You must submit an informal written application to the BZSt to initiate a mutual agreement procedure.

Please note
In principle, companies must submit the application in their country of residence. If it is a permanent establishment, the application can also be submitted in its country of residence.

Process flow

You must submit the application to initiate a mutual agreement procedure in writing to the Federal Central Tax Office (BZSt).

  • Compile the necessary documents and papers. Send the signed application in triplicate by post to the BZSt.
  • The BZSt will confirm receipt of your application in writing. The BZSt will first check whether the requirements for carrying out a mutual agreement procedure have been met. If your application
    • is admissible and justified and
    • the double taxation cannot be eliminated unilaterally,

the intergovernmental part of the mutual agreement procedure is initiated.

  • As the applicant, you are not involved in the procedure yourself. However, you will receive regular information on the status and progress of the procedure.
  • As soon as a mutual agreement has been reached between Germany and the other EU country involved, you will be informed of the outcome.
  • You must confirm in writing that
    • you agree to the mutual agreement solution and waive the right to appeal against its correct implementation and
    • that you withdraw any legal remedies or appeals you may have lodged independently of the request to initiate the mutual agreement procedure, insofar as they relate to the subject matter of the mutual agreement procedure
  • The negotiated mutual agreement solution can now be implemented.

If the mutual agreement procedure has not led to a result even 2 years after the expiry of the arbitration period and no extension of the period has been agreed:

  • Arbitration proceedings will be initiated upon request and an Advisory Committee will be formed.
  • You have the opportunity to comment on the factual and legal situation to the Advisory Committee.
  • After completing its work, the Advisory Committee issues an opinion.
  • The competent authorities of the contracting states involved in the case can now agree on a solution (which may differ from the opinion of the Advisory Committee). If the competent authorities involved do not reach an agreement, the procedure is concluded in accordance with the opinion of the Advisory Committee six months after the opinion has been submitted.
  • As soon as a solution has been reached between Germany and the other EU Member State involved, you will be informed of the outcome.
  • You must confirm in writing that
    • you agree to the outcome of the arbitration proceedings and waive your right to appeal against the correct implementation of the arbitration proceedings and
    • that you withdraw any legal remedies or appeals you may have lodged independently of the request for arbitration, insofar as they relate to the subject matter of the arbitration.
  • The result of the arbitration proceedings can now be implemented.

Who should I contact?

Competent authority

Requirements

Applications for a mutual agreement procedure can be made:

  • Companies and, if applicable, their permanent establishments (natural and legal persons),
    • who are domiciled in Germany and
    • generate income (insofar as it relates to transfer pricing) in member states of the European Union,
      • where double taxation is imminent or has occurred

Which documents are required?

You must submit an application for a mutual agreement procedure:

  • Name, address, tax number and local tax office of the person entitled to the agreement
    • the applicant company
    • the contracting state and
    • the other parties involved in the relevant business transactions
  • detailed information on the facts and circumstances relevant to the case (including details of the relationship between the company and the other parties to the relevant transactions)
  • details of the relevant tax periods
  • copies
    • of the tax assessment notices
    • the tax audit report or
    • comparable documents that led to the alleged double taxation
    • other relevant documents (e.g. contracts, applications for refund/reduction of foreign withholding tax)
  • detailed information on any extrajudicial or judicial appeal proceedings,
    • which the company or the other parties involved in the transactions concerned have initiated
    • any court judgments relating to the case
  • a statement by the company as to how it considers that the principles set out in Article 4 of the Arbitration Convention have not been respected
  • an undertaking by the company that it will
    • as fully and
    • as soon as possible

respond to all reasonable and appropriate requests from a competent authority and provide documentation to the competent authorities

What are the fees?

  • none

Notes:
Fees may be incurred for preliminary approval procedures.
The costs incurred by the applicant (e.g. for compiling the documents or for legal advice) will not be reimbursed.

What deadlines do I have to pay attention to?

  • Application: within 3 years of the first notification of the measure that
    • causes or could cause double taxation
    • could give rise to double taxation

Processing duration

  • for processing the application: 24 months
  • Initiation of arbitration proceedings: 2 years after the start of the mutual agreement procedure (upon request, if this has remained without result and no extension of the mutual agreement procedure is agreed)
  • for the award of the Advisory Committee: 6 months after submission of all necessary documents
  • Agreement between the competent authorities involved or and notification of the result: within 6 months of the Advisory Committee's award

Legal basis

Applications / forms

  • Objection if the application is rejected
  • Fiscal court action

Appeal

  • Forms: no
  • Online procedure possible: no
  • Written form required: yes
  • Personal appearance: no

Signed, informal application in written form

Further Information

Author

Forwarding service: Deep link to the original portal

The text was automatically translated based on the German content.

Technically approved by

Federal Ministry of Finance (BMF)

Professionally released on

14.06.2021

Source: Zuständigkeitsfinder Thüringen (Linie6PLus)

Competent Authority

Bundeszentralamt für Steuern (BZSt), Verständigungsverfahren

Address
An der Küppe 1
53225 Bonn, Stadt
Telephone
+49 228 4060
Fax
+49 228 4063118
E-Mail
Contact us
Opening times

Service hours

  • Monday to Thursday: 9:00 a.m. to 3:00 p.m.
  • Friday: 9:00 a.m. to 12:00 p.m.