International issues (arbitration/MAP)

International disputes

The question of whether sufficient tax is paid by companies with an international structure has plenty of attention. Not only nationally, as highlighted for instance in December 2016 with the installation of the Parliamentary Inquiry Committee on Fiscal Constructions, but also internationally for some time. Such as:

• Discussion about BEPS (base erosion and profit shifting);

• Plans for a European tax base for profit tax, which were not received with equal enthusiasm everywhere;

• Exchange of information between European Member States about agreements that give companies advance certainty about the national taxation of profits;

• ‘Mandatory disclosure’, obligation to report cross-border tax constructions that result in less tax being paid;

• The fight against tax avoidance will not go silent any time soon. International disputes about in which country tax should be levied and whether double taxation rules are properly complied with will become more frequent as a result of this attention and developments.

State aid

Moreover, the European Commission is not shy in its assessment of tax settlements and prompting national governments to pursue and actually collect a tax deficit. The first major and high-profile cases are already a reality. It is expected that certain ‘tax arrangements’ will also qualify as state aid. In that case, smaller international companies will also be in the crosshairs. It is expected that the number of disputes on this subject will increase exponentially.

Legal protection

Legal protection is poor in this type of procedure. And the agreement in the European Council on the Fiscal Dispute Resolution Directive to avoid double taxation will not change that soon. Not only do such disputes take an extraordinarily long time. Above all, many also go beyond the taxpayer because they are (partly) seen as a dispute of understanding between States or the European Commission and a relevant Member State. Moreover, the CJEU seems to regard elementary legal principles as secondary to achieving ‘a correct tax’.

Legal aid (arbitration/Mutual Agreement Procedure)

Agitating in this type of litigation, to the extent that it happened at all for fear of image damage, long seemed to be reserved for the ‘big’ firms. Because of the increase in the number of such disputes, but certainly also because of the tightening of the rules on independence, this ‘domain’ is increasingly shifting to niche firms. Like ours. We often work together with either our ‘own’ tax consultant, or renowned specialists in either the client’s industry, or the specific material tax speciality.