Introduction to European Tax Law on Direct Taxation

Jean-Philippe Van West/Christiane Zöhrer

S. 300I. Aim and History

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Convention 90/436/EEC on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (hereinafter: Arbitration Convention) and Council Directive (EU) on tax dispute resolution mechanisms in the European Union (2017/1852) (hereinafter: Dispute Resolution Directive) are both instruments that can be used to resolve double taxation disputes within the European Union. The introduction of these two legal instruments was the result of a long process. In 1976, the Commission proposed a directive for the elimination of double taxation as regards profit adjustments in transfer pricing scenarios. This directive was never implemented but, in 1990, the Arbitration Convention was concluded. The aim of the Arbitration Convention is to establish a procedure to eliminate double taxation resulting from a profit adjustment by the competent authorities in one contracting state without a corresponding adjustment in the other contracting state. It is not an EU law instrument, but a multilateral international law convention; however, it is part of the acquis communautaire. The validity of the Arbitrat...