The Mutual Agreement Procedure (MAP) is a mechanism under the double tax treaty (DTT) between the European Union (EU) and its member states. The objective of the MAP is to resolve disputes between EU member states regarding the interpretation and application of double tax treaties.
The MAP is an important tool for companies doing business in the EU, as it provides a means to avoid double taxation that may arise between member states due to differences in taxation laws and regulations. It also ensures that companies are able to claim relief for taxes paid in one country against tax payable in another.
The MAP is initiated by a taxpayer, who provides a request for assistance to the competent authority of the country of residence. The request must contain details of the taxpayer, the relevant tax treaty provisions, and the nature of the dispute. The competent authority then initiates the MAP process by notifying the other member state(s) involved.
The MAP process is conducted by the competent authorities of the member state(s) concerned and is aimed at finding a mutually acceptable solution to the dispute within a given time frame. If a solution is found, it is documented in an agreement between the member states involved. This agreement is then used to adjust the taxes of the taxpayer concerned.
There are various benefits of the MAP for companies doing business in the EU. Firstly, it provides a mechanism for resolving disputes relating to double taxation, which can lead to significant cost savings. Secondly, it ensures that companies are not unfairly taxed as a result of differences in tax laws and regulations between member states. Finally, it promotes transparency and certainty in tax matters, which can enhance the overall business environment in the EU.
In conclusion, the Mutual Agreement Procedure (MAP) is an important mechanism under the double tax treaty between the European Union (EU) and its member states. The MAP provides a means to resolve disputes between member states regarding the interpretation and application of double tax treaties, and is an important tool for companies doing business in the EU. Companies should be aware of the MAP and consider using it when faced with double taxation disputes.