Publications search
Current operation of double taxation conventions obstacle to cross-border EU activity
The European Commission has recently published a summary of the responses received in respect of its recent consultation on double taxation conventions across the EU.
The results of the consultation confirm that despite numerous initiatives in recent years, tax barriers to cross-border and investment activity within the EU are still very much part of the picture - only six per cent of corporate tax payers who responded to the consultation had not encountered a double taxation dispute of some kind.
Unsurprisingly, transfer pricing is one of the worst culprits (almost 34 per cent of reported cases). Dispute resolution mechanisms (for example, mutual agreement procedures between tax authorities) also come in for criticism.
The report states that the Commission recognises that the situation cannot be addressed only through unilateral action by member states or bilateral tax conventions, and suggests that "soft law" EU-wide instruments could be implemented in the coming years. A communication as to the policy direction will be issued in the second quarter of 2011. While this will undoubtedly make interesting reading, cynics will be quick to condemn the proposals as "just another expensive EU initiative" if the suggested measures do not have real legislative teeth. The report includes a selection of respondents' suggestions as to how best to eliminate double taxation within the EU - however, very few of these could be implemented without far-reaching legislative intervention.
For the full text of the report click here.
Follow all our
latest tax updates on Twitter
28 January 2011
Author: Andrew Loan
