EU provides a boost for dispute resolution

It’s often easy to forget that, despite the often-deafening roar to the contrary, the UK remains a member of the EU for the time being.

With this in mind businesses may well have been pleased to see that European Union countries are set to draft national laws that will include a directive to give companies and individuals the option of mandatory arbitration to resolve double taxation disputes beginning in 2019.

An accord by EU finance ministers reached last week is expected to help settle more than 900 outstanding double taxation cases between multinational companies and national tax authorities that are worth more than 10.5 billion euros. The draft legislation is set to make dispute resolution more effective.

The draft Double Taxation Dispute Resolution Directive requires dispute resolution mechanisms to be mandatory and binding, with clear time limits and an obligation to reach results.

The new legislation, which must be implemented into each EU member state’s national laws, will require each EU country to set up an advisory commission to hear double-tax disputes involving all income streams.

Member states also have the option of adopting alternative dispute resolution panels that can use innovative mediation methods.

“This agreement is crucial to making the EU an attractive environment for investment,” said Malta Finance Minister Edward Scicluna, whose country holds the rotating EU presidency and therefore chaired the Council of Economic and Financial Affairs (Ecofin) meeting at which the agreement was reached.

“In the same way that we have taken measures to prevent tax avoidance, we have now moved to strengthen the avenues to resolve double taxation disputes,” he added.

Currently, EU member states have the option to resolve double taxation disputes via bilateral treaty conventions. But these are usually tedious and costly legal battles – often ending with no decision.

The new legislation will establish mandatory, binding rules with a two-year time limit but also provides various options for convening a dispute panel. One option involves an advisory commission, another an ad-hoc . Another involves an “ad-hoc” structure with experts and judges from two or more member countries.

The move is set to be rubber-stamped in June by the European Parliament. If you think you’ll be affected by this new legislation, please do get in touch.

If you need advice on Dispute Resolution, Rothera Sharp have the team for you. Call our solicitors on 0800 088 6280 or email enquiries@rotherasharp.co.uk

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