Non-residents: news on double taxation

Non-Residents

On Tuesday, 10 October 2017, the European Union adopted a new directive setting up a new system for the settlement of disputes in the field of double taxation between member States. This will strengthen the mechanisms already in place to harmonize agreements between Member States with a view to eliminating disputes arising from double taxation.

As a reminder, double taxation applies to situations in which two or more countries invoke the right to tax the same income or profits of a company or person. This situation may arise, for example, as a result of asymmetry in national rules or different interpretations of a bilateral tax convention as regards transfer pricing arrangements.

As a result of this decision, businesses and citizens will be able to resolve disputes relating to the interpretation of tax treaties more quickly and effectively.

“This new system is a major step forward. It will encourage investment by creating a more favorable tax environment and reducing costs for businesses, “said Toomas Tõniste, Estonian Minister of Finance, currently holding the Presidency of the Council.

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “We have proposed this new system in order to improve the legal certainty and competitiveness of the Union by creating a binding obligation for the authorities of the Member States to speedily resolve tax disputes. This is an important step in enabling EU citizens and businesses to benefit from fair tax treatment. I welcome the speedy action of the Member States and the European Parliament in favor of upgrading the existing rules. “

This agreement will ensure that companies and taxpayers who are victims of these disputes have the possibility of initiating a procedure requiring the Member States concerned to settle the dispute amicably and within a period not exceeding two years.

If, on the expiry of this period of two years, no solution has been found, Member States shall set up an advisory committee to make an arbitration. If the Member States fail to do so, the taxpayer may bring an action before the national court to that effect. This advisory committee will be composed of 3 independent members and representatives of the competent authorities concerned. It will have six months to make a final and binding decision. This decision shall be immediately enforceable and shall resolve the dispute.

Source: European Commission

Cabinet Roche & Cie, English speaking accountant in Lyon, France.
Specialist in Real-Estate and Non-resident taxation.