3.4. Re-entry into force of the Arbitration Convention
32. After ratification by all Member States, the Protocol to the Arbitration Convention, re-entered into force on 1 November 2004 (with retroactive effect from 1 January 2000) inter alia extending its validity by periods of five years.
33. Considering the diverging positions taken by Member States during the interim period when not all Member States had ratified the Protocol (see Annex 1 to the first report[6] of the JTPF) the Forum was of the opinion that discussing the different problems related to the re-entry into force of this instrument, in particular with regard to the tax treatment of pending cases, could be useful for finding common solutions and ensuring taxpayers' legal certainty.
34. The replies to a questionnaire on pending mutual agreement procedures (MAPs) under the EU Arbitration Convention that was sent to Member States' tax administrations revealed that a total of 109 cases were pending on 31 December 2004. In 64 of these cases the time already spent on the mutual agreement procedures exceeded two years and in 24 cases the taxpayer had made the request prior to 1 January 2000, which means that these cases had been pending for more than five years (unless the two-year time limit has been extended in accordance with Article 7(4) of the Arbitration Convention).
35. The results of the questionnaire clearly show the importance of the JTPF's work on the Code of Conduct for the effective implementation of the Arbitration Convention[7]. Member States are, therefore, urged to expedite reaching mutual agreements on their pending MAPs under the Arbitration Convention, especially as regards those cases on which more than two years have already been spent. Those Member States concerned with the 24 cases where the taxpayer made the request prior to 1 January 2000 are urged to set up advisory commissions, without further delay, and to submit the cases for arbitration, in order urgently to eliminate the double taxation. In the case of requests made by taxpayers before 1 November 2004, in line with the provisions of the Prolongation Protocol, the arbitration procedure (the second phase of the Convention) should be initiated as follows (unless the two-year time limit has been extended in accordance with Article 7(4) of the Convention):
- for cases where the mutual agreement procedure was initiated more than two years before 1 November 2004: as soon as possible after the Protocol entered into force, i.e. soon after 1 November 2004; and
- for cases where the mutual agreement procedure was initiated less than two years before 1 November 2004: two years after the commencement of the mutual agreement procedure.
