On May 6, 2019, Portugal’s Assembly of the Republic (a unicameral legislature) received Proposed Law No. 201/XIII from the Council of Ministers (an executive body that includes the Prime Minister), which would implement the EU Directive on Tax Dispute Resolution Mechanisms (2017/1852) of October 10, 2017, discussed in the section below. The Assembly’s Committee on Budget, Finance and Administrative Modernization received the proposals the same day, according to the legislative history.
Article 27 of the legislation says that the rules would apply to double tax complaints – discussed in the section below – filed after July 1, 2019, that cover tax periods beginning on or after January 1, 2018.
Editor’s Note: EU member states must implement Directive 2017/1852 into their national law by June 30, 2019.
Background
Directive 2017/1852 requires EU member states to introduce domestic rules on dispute resolution procedures with respect to international tax. The rules provide for a procedure initiated by a single taxpayer application, with EU member states then seeking mutual negotiation to resolve the tax dispute, including through arbitration.
Directive 2017/1852 includes the following:
- Conditions under which the taxpayer can initiate the dispute settlement procedure.
- Application requirements.
- Obligations the applicant and the competent authority receiving the application will have at different stages of processing the application.
- Mutual consultation between the competent authorities of the States.
- Detailed rules on the composition, procedure, confidentiality, and resolution of the dispute settlement committee or the alternative dispute resolution (ADR).
Under Directive 2017/1852, taxpayers may submit a complaint regarding an income tax dispute to each competent authority (CA) of the EU member states concerned within three years of notification of the action resulting in the tax dispute. Each CA must acknowledge receipt of the complaint within two months, may request additional information within three months, and must decide whether to accept the complaint within six months of receipt of the complaint or such information.
If a complaint is accepted, the CAs must try to resolve the dispute by mutual agreement within two years. If a dispute is rejected by at least one, but not all, of the CAs, or the CAs fail to resolve the dispute, the taxpayer may request that an advisory commission is established. Alternatively, the CAs may agree to establish an ADR commission. Each must deliver its opinion within six months, and the CAs must resolve the dispute within another six months.
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