The EU Arbitration Convention

The EU Arbitration ConventionAn evaluating assessment of the governance and functioning of the EU Arbitration Convention

Summary for non-expertsThe EU Arbitration Convention is a convention between EU Member States to eliminate double taxation arising from – for tax purposes – transfer pricing profit adjustments between associated entities. This convention provides taxpayers a procedure that should eliminate this double taxation within a certain time period, if necessary, by means a compulsory and binding arbitration procedure. This study tested whether the design of the convention is such that it can fulfill its principal objective. It looks both at the governance of the convention (the legal status of the convention, which party applies it on a day-to-day basis and the parties involved in the further development of the convention) and how it functions in practice (formal and material scope of application, its tax principles and procedural functioning). Outcome of the performed research is that the governance is not properly designed, is not effective and efficient. Main reason is that there is a flaw in the institutional design of the treaty that causes that cases are not resolved in time and are not referred to the arbitration procedure. Furthermore, there are many rules and procedures that have not been fully written out in the convention and which impedes the convention’s proper functioning. Examples are the absence of of deadlines for different procedures, unclear and unsatisfactory concurrence with national proceedings and the absence of an alternative mechanism if Member States do not comply with their treaty obligations. To solve the problems identified, a detailed amendment of the convention and its Code of Conduct is proposed.

Dissertation: http://hdl.handle.net/11370/74f6de1d-18c8-4d4d-9285-c905e2f988cf