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- Where,
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- a)under paragraph 1 of Article 24, a person has presented a case to a competent authority of a Contracting State on the basis that the actions of one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of this Convention, and
- b)the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 of Article 24 within two years from the date when all the information required by the competent authorities in order to address the case has been provided to both competent authorities,
- any unresolved issues arising from the case shall be submitted to arbitration if the person so requests in writing. These unresolved issues shall not, however, be submitted to arbitration if a decision on these issues has already been rendered by a court or administrative tribunal of either State. Unless a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision or the competent authorities agree on a different resolution of all unresolved issues arising from the case within 90 days after the decision has been communicated to them, the arbitration decision shall be binding on both Contracting States and shall be implemented notwithstanding any time limits in the domestic laws of these States. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.
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- Where a competent authority has suspended the mutual agreement procedure referred to in paragraph 1 because a case with respect to one or more of the same issues is pending before a court or administrative tribunal, the period provided in subparagraph b) of paragraph 1 will stop running until either a final decision has been rendered by the court or administrative tribunal or the case has been suspended or withdrawn. Also, where a person who presented a case and a competent authority have agreed to suspend the mutual agreement procedure, the period provided in subparagraph b) of paragraph 1 will stop running until the suspension has been lifted.
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- Where both competent authorities agree that a person directly affected by the case has failed to provide in a timely manner any additional material information requested by either competent authority after the start of the two year period referred to in subparagraph b) of paragraph 1, the period provided in that subparagraph shall be extended for an amount of time equal to the period beginning on the date by which the information was requested and ending on the date on which that information was provided.
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- If, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities of the Contracting States, a decision concerning the issue is rendered by a court or administrative tribunal of either State, the arbitration process shall terminate.
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- Prior to the beginning of arbitration proceedings, the competent authorities of the Contracting States shall ensure that each person that presented the case and their advisors agree in writing not to disclose to any other person any information received during the course of the arbitration proceedings from either competent authority or the arbitration panel. The mutual agreement procedure under paragraph 1 of Article 24 and the arbitration proceedings related to the case shall terminate if, at any time after a request for arbitration has been made and before the arbitration panel has delivered its decision to the competent authorities, a person that presented the case or one of that person’s advisors materially breaches that agreement.
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- For the purposes of paragraph 1:
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- a)the mutual agreement that implements the arbitration decision on the case shall be considered not to be accepted by a person directly affected by the case if any person directly affected by the case does not, within 60 days after the date on which notification of the mutual agreement is sent to the person, withdraw all issues resolved in the mutual agreement implementing the arbitration decision from consideration by any court or administrative tribunal or otherwise terminate any pending court or administrative proceedings with respect to such issues in a manner consistent with that mutual agreement; and
- b)the decision shall not be binding on the Contracting States if:
- (i)a final decision of the courts of one of the Contracting States holds that the arbitration decision is invalid. In such a case, the request for arbitration under paragraph 1 shall be considered not to have been made, and the arbitration process shall be considered not to have taken place (except for the purposes of paragraphs 12, 13 and 16). In such a case, a new request for arbitration may be made, unless the competent authorities agree that such a new request should not be permitted, within 90 days after the decision of the court; or
- (ii)a person directly affected by the case pursues litigation in any court or adminstrative tribunal concerning the issues that were resolved in the mutual agreement implementing the arbitration decision.
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- A request that unresolved issues arising from a mutual agreement case be submitted to arbitration pursuant to paragraph 1 (the “request for arbitration”) shall be made in writing and sent to one or both of the competent authorities. The request shall contain sufficient information to identify the case. The request shall also be accompanied by a written statement by each of the persons who either made the request or is directly affected by the case that no decision on the same issues has already been rendered by a court or administrative tribunal. Within 10 days after the receipt of the request, a competent authority who received it without any indication that it was also sent to the other competent authority shall send a copy of that request and the accompanying statements to the other competent authority.
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- A request for arbitration may only be made after two years from the date when all the information required by the competent authorities in order to address the case has been provided to both competent authorities (hereinafter referred to as the “start date”). For this purpose, the information required by the competent authorities in order to address the case shall include:
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- a)identity of the taxpayer(s) covered in the request for the mutual agreement procedure;
- b)the basis for the request;
- c)facts of the case;
- d)analysis of the issue(s) requested to be resolved by mutual agreement;
- e)whether the request was also submitted to the competent authority of the other Contracting State;
- f)whether the request was also submitted to another authority in accordance with a bilateral or multilateral convention that provides for a mechanism to resolve the issue(s) that fall within the scope of the case;
- g)a statement confirming that all information and documentation provided in the request is accurate and that the taxpayer will assist the competent authority in its resolution of the issue(s) presented in the request by furnishing any other information or documentation required by the competent authority in a timely manner; and
- h)whether the issue(s) involved was (were) dealt with previously.
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- The following rules shall apply in order to determine the start date:
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- a)The competent authority that received the initial request for a mutual agreement procedure under paragraph 1 of Article 24 shall, within 60 days after receiving the request:
- (i)send a notification to the person who presented the case that it has received the request; and
- (ii)send a notification of that request, along with a copy of the request, to the competent authority of the other Contracting State.
- b)Within 90 days after receiving the request for a mutual agreement procedure (or a copy thereof from the competent authority of the other Contracting State), each competent authority shall either:
- (i)notify the person who has presented the case and the other competent authority that it has received the information necessary to undertake substantive consideration of the case; or
- (ii)request additional information from that person for that purpose.
- c)Where pursuant to subdivision (ii) of subparagraph b) above, one or both of the competent authorities have requested from the person who presented the case additional information necessary to undertake substantive consideration of the case, the competent authority that requested the additional information shall, within 90 days after receiving the additional information from that person, notify that person and the other competent authority either:
- (i)that it has received the requested information; or
- (ii)that some of the requested information is still missing.
- d)Where neither competent authority has requested additional information pursuant to subdivision (ii) of subparagraph b) above, the start date shall be the earlier of:
- (i)the date on which both competent authorities have notified the person who presented the case pursuant to subdivision (i) of subparagraph b) above; and
- (ii)the date that is 90 days after the notification to the competent authority of the other Contracting State pursuant to subdivision (ii) of subparagraph a) above.
- e)Where additional information has been requested pursuant to subdivision (ii) of subparagraph b) above, the start date shall be the earlier of:
- (i)the latest date on which the competent authorities that requested additional information have notified the person who presented the case and the other competent authority pursuant to subdivision (i) of subparagraph c) above; and
- (ii)the date that is 90 days after both competent authorities have received all information requested by either competent authority from the person who presented the case.
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- The following rules shall govern the selection and appointment of arbitrators:
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- a)The arbitration panel shall consist of three individual arbitrators with expertise or experience in international tax matters. Each arbitrator appointed to the arbitration panel must be impartial and independent of the competent authorities, tax administrations, and ministries of finance of the Contracting States and of all persons directly affected by the case (as well as their advisors) at the time of accepting an appointment, maintain his or her impartiality and independence throughout the proceedings, and avoid any conduct for a reasonable period of time thereafter which may damage the appearance of impartiality and independence of the arbitrators with respect to the proceedings.
- b)Within 60 days after the request for arbitration (or a copy thereof) has been received by both competent authorities, the competent authorities shall each appoint one arbitrator. Within 60 days of the later of the appointments, the arbitrators so appointed will appoint a third arbitrator who will function as Chair. The Chair shall not be a national or resident of either Contracting State.
- c)If any appointment is not made within the required time period, the arbitrator(s) not yet appointed shall be appointed by the highest ranking official of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development who is not a national of either Contracting State within 10 days after receiving a request to that effect from the person who made the request for arbitration. The same procedure shall apply with the necessary adaptations if for any reason it is necessary to replace an arbitrator after the arbitration process has begun.
- d)An arbitrator will be considered to have been appointed when a letter confirming that appointment and signed by both the arbitrator and the person or persons who have the power to appoint that arbitrator has been communicated to both competent authorities.
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- Except to the extent that the competent authorities of the Contracting States mutually agree on different rules, the following rules shall apply with respect to an arbitration proceeding pursuant to this Article:
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- a)Within 60 days after the appointment of the Chair of the arbitration panel (unless, before the end of that period, the competent authorities agree on a different period), the competent authority of each Contracting State shall submit to each arbitrator and to the other competent authority a proposed resolution which addresses all unresolved issue(s) in the case (taking into account all agreements previously reached in that case between the competent authorities). The proposed resolution shall be limited to a disposition of specific monetary amounts (for example, of income) or, where specified, the maximum amount of tax that may be charged pursuant to the provisions of the Convention, for each adjustment or similar issue in the case. In a case in which the competent authorities of the Contracting States have been unable to reach agreement on an issue regarding the conditions for application of a provision of the Convention (hereinafter referred to as a “threshold question”), such as whether an individual is a resident or whether a permanent establishment exists, the competent authorities may submit alternative proposed resolutions with respect to issues the determination of which is contingent on resolution of such threshold questions.
- b)The competent authority of each Contracting State may also submit to the arbitrators and to the other competent authority, within the period of time provided for in subparagraph a), a supporting position paper for consideration by the arbitrators.
- c)Each competent authority may also submit to the arbitrators and to the other competent authority, within 120 days after the appointment of the Chair of the arbitration panel, a reply submission with respect to the proposed resolution and supporting position paper submitted by the other competent authority.
- d)As far as possible, the arbitrators will use tele- and videoconferencing to communicate between themselves and with both competent authorities. If a face-to-face meeting involving additional costs is necessary, the Chair will contact the competent authorities who will decide when and where the meeting should be held and will communicate that information to the arbitrators.
- e)The arbitration panel shall select as its decision one of the proposed resolutions for the case submitted by the competent authorities with respect to each issue and any threshold questions, and shall not include a rationale or any other explanation of the decision. The arbitration decision will be adopted by a simple majority of the arbitrators. Unless the competent authorities agree otherwise, the arbitration decision shall be delivered to the competent authorities of the Contracting States in writing within 60 days after the reception by the arbitrators of the last reply submission or, if no reply submission has been submitted, within 150 days after the appointment of the Chair of the arbitration panel. The arbitration decision shall have no precedential value.
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- For the sole purposes of the application of the provisions of Articles 26 and 27 of the Convention, the provisions of this Article and the domestic laws of the Contracting States, concerning the communication and confidentiality of the information, as well as administrative assistance, related to the case that results in the arbitration process, each arbitrator and a maximum of three staff per arbitrator (and prospective arbitrators solely to the extent necessary to verify their ability to fulfil the requirements of arbitrators) shall be designated as authorised representatives of the competent authority that has apppointed that arbitrator or, if that arbitrator has not been appointed by a competent authority, of both competent authorities.
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- In designating a person as its authorised representative pursuant to paragraph 12, the competent authority of a Contracting State shall ensure that the person agrees in writing to treat any information relating to the arbitration proceeding consistently with the confidentiality requirements of the Convention and of the applicable laws of that Contracting State.
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- In the event that the decision has not been communicated to the competent authorities within the period provided for in subparagraph e) of paragraph 11, or within any other period agreed to by the competent authorities, the competent authorities may agree to appoint new arbitrators in accordance with paragraph 10. The date of such agreement shall, for the purposes of the subsequent application of paragraph 10, be deemed to be the date when the request for arbitration has been received by both competent authorities.
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- Where, at any time after a request for arbitration has been made and before the arbitrators have delivered a decision to the competent authorities, the competent authorities notify in writing the arbitrators:
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- a)that they have solved all the unresolved issues that were subject to arbitration; or
- b)that the person who presented the case has withdrawn the request for arbitration or the request for a mutual agreement procedure;
- no arbitration decision shall be provided and the mutual agreement procedure shall be considered to have been completed.
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- Unless agreed otherwise by the competent authorities:
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- a)each competent authority and the person who requested the arbitration will bear the costs related to his own participation in the arbitration proceedings (including travel costs and costs related to the preparation and presentation of his views);
- b)each competent authority will bear the remuneration of the arbitrator appointed exclusively by that competent authority, or appointed by the highest ranking official of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development that is not a national of either Contracting State because of the failure of that competent authority to appoint that arbitrator, together with that arbitrator’s travel, telecommunication and secretariat costs;
- c)the remuneration of the Chair of the arbitration panel and that Chair’s travel, telecommunication and secretariat costs will be borne in equal shares by the two competent authorities;
- d)other costs related to any meetings of the arbitration panel will be borne by the competent authority that hosts that meeting;
- e)costs related to expenses that both competent authorities have agreed to incur, will be borne in equal shares by the two competent authorities.
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- Notwithstanding paragraph 1, a case may not be submitted to arbitration if:
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- a)the case is connected with actions for which the taxpayer or a related person (or a person acting for either the taxpayer or a related person) has been found guilty by a court or has incurred substantial penalties for tax fraud, evasion, or avoidance;
- b)the case involves the application of Ireland's domestic anti-avoidance rules contained in sections 811 and 811A of the Taxes Consolidation Act 1997. Any subsequent provisions replacing, amending or updating these anti-avoidance rules would also be comprehended. Ireland shall notify the Netherlands through diplomatic channels of any such subsequent provisions;
- c)the issue falls within the scope of a case with respect to which an arbitration panel or similar body has previously been set up in accordance with a bilateral or multilateral convention that provides for mandatory binding arbitration of unresolved issues arising from a mutual agreement procedure case.
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- The competent authorities shall implement the arbitration decision within 180 days of the communication of the decision to them by reaching a mutual agreement on the case that led to the arbitration.
