Finnish Parliament Considering Bill To Transpose EU Directive On Dispute Resolution

; posted on
January 22nd, 2019

The Finnish Parliament is currently considering Bill HE 308/2018, which provides for the transposition of Council Directive (EU) 2017/1852. In addition the bill addresses certain other tax dispute resolution mechanisms related to the interpretation of tax treaties. The aim of the bill is to enhance the resolving of international tax disputes and to avoid double taxation in cross-border context.

The main proposal

The proposed bill will repeal the existing rule section 89-5, paragraph 5 in the Taxation Procedure Act. Under the proposed law, the new rules also apply to:

  • tax disputes where a taxpayer has requested a mutual agreement procedure (MAP) based on a tax treaty; and
  • transfer pricing disputes based on the EU Arbitration Convention.

In addition, the following table illustrates the main changes to the current processes and contents of the draft proposal on a high level.

 

Current

Draft

 

Binding arbitration

Possibility of parallel domestic appeal process

Binding arbitration

Possibility of parallel domestic appeal process

EU tax disputes on the interpretation of tax treaties

No. Based on the tax treaties authorities can negotiate but they do not have an obligation to resolve the double taxation.

Yes. The authorities can wait for final domestic decision before proceeding with the process.

Yes. Implementation of the Directive extends the possibility to refer the case to binding arbitration to all double taxation case involving EU countries.

No. Taxpayers have to choose between this process and domestic appeal process.

EU transfer pricing disputes

Yes. Binding arbitration if the competent authorities are not able to resolve the double taxation.

Yes. Similar as before but revised, more precise and procedural rule of the new legislation apply.

Non-EU tax disputes on the interpretation of tax treaties

No. Based on the tax treaties authorities can negotiate but they do not have an obligation to resolve the double taxation.

No. But implementation of the multilateral instrument later may extent the binding arbitration to the interpretation of non-EU tax treaties.


Timing of the legislative process

The bill is proposed to seek applications filed on 1 July 2019 or thereafter which concern tax years started on 1 January 2018 or later. However, part of the new legislation, such as the obligation to choose between the tax dispute resolution mechanisms and the domestic appeal process, is applicable to all applications filed on 1 July 2019 or thereafter.

Source: Finnish Parliament

 

Our Solutions - Let's Talk Business!

TPA Global provides solutions in the area of BEPS, Value Chain Analysis for multinationals along with variety of tax, business and educational technologies. Let us show you how to improve your operations and move from “staying out of trouble” to “being in control”.

TPA Global Services Menu Card     TPA Global Solutions    Tax & TP Technology

Copyright © 2019
Transfer Pricing Associates BV.
All rights reserved.
 

H.J.E. Wenckebachweg 210
1096 AS Amsterdam
T: +31 20 462 3530
E: info@tpa-global.com
I: www.tpa-global.com