If you are of the opinion that your taxation is in breach of a double taxation agreement (DTA), you can apply for a mutual agreement procedure under certain conditions. The aim of mutual agreement procedures is to

• to protect the taxpayer's right to taxation in accordance with the double taxation agreement and
• to avoid taxation that does not comply with a DTA (e.g. double taxation).

The legal basis for a mutual agreement procedure can be found in the respective DTA.

A DTA is an agreement between two countries that regulates the allocation of the right to tax cross-border income (e.g. in the case of residence in one country and source of income in the other country).

Germany has concluded DTAs with over 90 countries worldwide. Most of these DTAs follow the OECD Model Tax Convention, which is widely used internationally. The OECD Model Tax Convention contains the regulations on mutual agreement procedures.

The Federal Central Tax Office (BZSt) is the authority responsible for such mutual agreement procedures in Germany.

If you are resident in Germany, you can submit an informal written request to the BZSt to initiate a mutual agreement procedure.

If you are not resident in Germany, you must generally submit the application for a mutual agreement procedure to the competent authority in your country.

The mutual agreement procedure under the DTA will only be initiated if your request is

• is admissible and justified and
• the taxation in Germany cannot be corrected on its own.

The mutual agreement procedure is used to clarify or delimit the tax claims between the two states between which a DTA exists. 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.

In addition, more recent DTAs often contain provisions that require arbitration proceedings to resolve the dispute if the competent authorities of the two states fail to reach an agreement within a certain period of time (e.g. DTAs with Austria, Switzerland, France, Luxembourg, the Netherlands and the USA). In this case, the dispute is then submitted to a panel of independent arbitrators for a decision. The details are regulated differently in the agreements.

Note
In the event of disputes between the member states of the European Union (EU) regarding agreements to eliminate double taxation, you can, under certain conditions, submit a complaint in accordance with the EU Double Taxation Agreement Dispute Settlement Act (EU-DBA-SBG).