In order to avoid double taxation, “Fashion Distributor A/S” had requested the Danish Tax Authorities, in parallel to the review of a transfer pricing assessment, to conduct a mutual agreement procedure under Article 6 of the EC Arbitration Convention 1990. The Danish Tax Authorities rejected the request on the grounds that it did not contain the minimum information required by paragraph 5(a) of the Code of Conduct for the effective implementation of the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (EU Code of Conduct 2006). Judgement of the High Court The Court held that the reference in Article 7(1) of the EC Arbitration Convention to Article 6(1) had to be understood as referring only to the ‘timely presented case’ and did not imply that case was also ‘submitted’ within the meaning of Article 7(1). Furthermore, the Court found that the company’s complaint of double taxation undoubtedly appeared justified, and that the tax authorities rejection of the case was therefore unjustified. On that basis it was decided that the Danish Tax Authorities should initiate and pursue the mutual agreement procedure on the basis of the company’s request. Click here for English translation Click here for other translation ...

In order to avoid double taxation, a company had requested the Danish tax authorities (SKAT), “in parallel” with the review of a transfer pricing adjustment, that a mutual agreement procedure be carried out under the EC Arbitration Convention. SKAT had refused on the grounds that the 3-year time limit for this under Article 6 of the Convention had been exceeded. The company had appealed SKAT’s decision to the Tax Tribunal, but had at the same time – in accordance with SKAT’s instructions on bringing proceedings in the contested decision – appealed against the decision to the courts. Decision of the High Court The Court held that the EC Arbitration Convention is covered by the provision in § 2, cf. § 1, of Order No 1029 of 24 October 2005 on double taxation conventions. SKAT’s decision could therefore not be appealed to another administrative authority, but had to be brought before the courts instead, as had happened. SKAT had rejected the request for the initiation of mutual agreement procedure under the EC Arbitration Convention as not timely because it did not contain the minimum information required by paragraph 5(a)(ii) of the Code of Conduct for the effective implementation of the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (2006/C 176/02). However, the Court did not consider the request to be deficient in relation to the requirements of the Code of Conduct and did not find that SKAT had had sufficient grounds to reject the request as late for lack of information. Click here for English Translation Click here for other translation ...