Prepared by Carlo Romano, Dario Sencar, Giorgio Massa and Daniele Conti
After the legislative decree n. 49/2020, dated last June, on 17 December 2020 the Revenue Agency published the (awaited) functioning rules concerning the EU tax dispute resolution mechanism.
In this respect, the said rules recall that the controversies covered by this procedure (consisting of a first stage of interaction between tax administrations, followed by a possible arbitration phase in the event of no mutual agreement) comprise the interpretation and application of the Conventions to avoid double taxation on income and capital entered into by the Member States of the European Union. In other words, this is an effective instrument alternative to the mechanisms already provided for by the same aforementioned conventions as well as by Convention 90/436 / EEC on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (i.e. the latter substantially relating to intragroup transfer pricing and to the attribution of profits to permanent establishments).
More specifically, in reaffirming the requirements of the complaint already provided by the decree, the Revenue Agency provides a formulary with the necessary information for the request to open the mutual agreement procedure, highlighting that the Italian language must be used or the complaint must be accompanied by an official Italian translation.
The provision referred to in point 2.12 appears quite interesting, as it expresses the affected taxpayer’s right to seek for a pre-filing meeting with the Agency so as to request “clarifications and / or indications regarding the mutual agreement procedure”. Such meeting could also be held remotely, i.e. via videoconference.
With respect to the conclusion of the procedure, however, there is no evidence in the aforesaid rules of any disclosure of the reasons behind the agreement, where only the relevant tax periods, the taxable amounts (on which to calculate the taxes due or to be refunded) and any other resident or non-resident person or entity affected by the dispute are notified as “essential elements“. Within sixty days of the said communication, the affected taxpayer must communicate the court proceedings’ waiver (where initiated), but the rules clarify that such waiver could also be partial.
Instead, the statement of “general reasons” for failure to reach the agreement will be included in the related notification sent by the Revenue Agency itself, pursuant to which the affected taxpayer may apply for the establishment of the Advisory Commission (and, therefore, initiate the arbitration phase).
The Revenue Agency rules provide a formulary for such request as well, diversified according to the preconditions of the arbitration which may concern not only the case where a mutual agreement is not reached, but also:
- the denial of access to the mutual agreement procedure by one or some of the competent authorities involved, but not by all, or
- the denial of access to the mutual agreement procedure by all competent authorities, appealed by the affected taxpayer, and followed by a court decision granting such appeal.
Lastly, the rules govern the withdrawal from the mutual agreement procedure and the notification of expenses incurred in during the arbitration procedure, due by the affected taxpayer in the event of withdrawal from the mutual agreement procedure or, subject to agreement between the competent authorities, in the further event that the Advisory Commission upholds the denial of access to the same procedure.
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