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Germany Legislates To Improve Tax Dispute Resolution

by Ulrika Lomas, Tax-News.com, Brussels

29 April 2019


On April 16, Germany's Ministry of Finance published a draft law that would transpose into German law the requirements of the European Union directive on tax dispute settlement mechanisms.

Directive 2017/1852 was adopted by the European Council on October 10, 2017, and allows taxpayers faced with tax treaty disputes to initiate a procedure that requires the member states in question to resolve the dispute amicably within two years. If at the end of this period no solution has been found, the member states must set up an advisory commission to arbitrate. Failing such, the taxpayer can then bring an action before the national court, requiring the member states to do so.

The Directive is intended to ensure that taxpayers have much more certainty when it comes to resolving issues surrounding the interpretation of tax treaties or double taxation problems. In particular, a wider range of cases will be covered and member states will now have clear deadlines to agree on a binding solution, giving citizens and companies more timely decisions.

EU member states must transpose the directive into national law by June 30, 2019. The rules will apply to any complaint submitted from July 1, 2019, relating to a tax dispute on income earned in a tax year commencing after January 1, 2018.

According to the draft law, if this transposition deadline cannot be met, the law will apply retrospectively from July 1, 2019.

TAGS: court | Finance | tax | value added tax (VAT) | law | legislation | Germany | European Union (EU) | Europe | BEPS

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