Given the situations where different member states interpret or apply the provisions of bilateral tax agreements and conventions, including the Convention on the Elimination of Double Taxation (90/436/EEC), differently, this can create significant tax obstacles for companies operating cross-border, disrupt economic activity, and generate efficiency problems. At the same time, it can negatively impact cross-border investments and economic growth. Therefore, it is necessary to have mechanisms in the European Union that make it possible to effectively resolve disputes related to the interpretation and application of bilateral tax treaties and the Union Arbitration Convention, especially disputes leading to double taxation. The Council of the European Union adopted Directive No. 1852/10.10.2017 on mechanisms for resolving tax disputes in the European Union.

The Directive establishes rules regarding a mechanism for resolving disputes between member states when such disputes arise from the interpretation and application of agreements and conventions that provide for the elimination of double taxation on income and, where applicable, capital. It also establishes the rights and obligations of affected persons when such disputes arise.

In the sense of the Directive, the fact that generates such disputes is called a “dispute matter.”

After receiving a tax decision involving double taxation, the affected person has the right to file a complaint regarding a dispute matter with the National Agency for Fiscal Administration (ANAF), requesting its resolution.

The complaint must be submitted within 3 years of the notification of the tax decision that results or is expected to result in a dispute matter, regardless of whether the affected person has used the available administrative or judicial remedies under the applicable legal rules.

Within the same period (3 years), the affected person must simultaneously submit the complaint containing the same information to the competent authorities of the involved member states, specifying in the complaint which other member states are involved.

The affected person’s complaint must include the following information and documents:

a) Identification details of the affected person;

b) The tax periods in question;

c) Details of the relevant facts and circumstances for the case; information regarding the nature and date of the actions that led to the dispute matter; details of the same income received in the other member state and the inclusion of such income in the taxable income category in the other member state; details of the tax paid or to be paid in connection with such income in the other member state;

d) The legal basis – the applicable legal rules that the affected person intends to invoke (agreements or conventions, etc.).If multiple agreements or conventions apply, the affected person specifies the agreement or convention generating the dispute matter;

e) Supporting documents (the reason the affected person believes there is a dispute matter; the administrative and judicial remedies used by the affected person; the procedures initiated by the affected person regarding the relevant transactions; copies of the decisions resolving the complaint and/or court rulings related to the dispute matter; a written declaration by the affected person committing to respond as fully and quickly as possible to any appropriate requests made by ANAF and to provide any documentation upon request; information regarding the tax decision leading to the dispute matter, including the final tax decision in the administrative or judicial remedies system issued by ANAF, as well as a copy of any other documents issued by the other member states’ tax authorities concerning the dispute matter, where applicable; information regarding any complaint filed by the affected person under another amicable procedure or another dispute resolution procedure regarding the same dispute matter, etc.).

Within 90 days of receiving the complaint, ANAF may request additional information and documents beyond those mentioned above, which are necessary to conduct a substantive examination of the complaint. The affected person must respond within 90 days of receiving the request and simultaneously send a copy of this response to the competent authorities of the other involved member states.

Within 180 days of receiving the complaint/from receiving the requested additional information and documents, ANAF decides whether:

a) It accepts the complaint and initiates the amicable procedure provided for in Article 283⁵ of the Fiscal Procedure Code;

b) It accepts the complaint and resolves the dispute matter unilaterally without involving the other competent authorities;

c) It rejects the complaint.

Author: Atty. Ionut Sfetcu