Mutual agreement procedure in double tax treaties
Produced in partnership with David Klass of Hunton Andrews Kurth
Mutual agreement procedure in double tax treaties

The following Tax guidance note Produced in partnership with David Klass of Hunton Andrews Kurth provides comprehensive and up to date legal information covering:

  • Mutual agreement procedure in double tax treaties
  • What is the mutual agreement procedure?
  • Summary of OECD model convention approach to mutual agreement
  • Initiation of MAP by a taxpayer
  • The competent authority’s obligations under the MAP
  • Interpretation and application
  • Practical operation of the MAP
  • Arbitration
  • OECD minimum standards on dispute resolution

Brexit: As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. This has an impact on this Practice Note. For further guidance, see Practice Note: Brexit—UK tax consequences.

What is the mutual agreement procedure?

The mutual agreement procedure (MAP) (also known as the competent authority procedure (CAP)) is an administrative procedure meant to help resolve difficulties arising from:

  1. double taxation of taxpayers in a manner contrary to the provisions of the particular double tax treaty or convention (DTT), and

  2. the application and interpretation of DTTs

While the MAP applies generally where there is double taxation that is not effectively or clearly resolved by DTTs, it is also expressly brought into play by the text of particular Articles, eg:

  1. attribution of profits to permanent establishments

  2. corresponding adjustments required following a transfer pricing adjustment, and

  3. the resolution of corporate dual residence

Article 25 of the OECD model convention provides a model form of mutual agreement procedure between contracting states. The detail of Article 25 is explained in the rest of this Practice Note.

Members of the EU can also rely on:

  1. the Convention on the elimination of double taxation in connection with the adjustment