Contents

This section concerns what a Mutual Agreement Procedure (MAP) is and how it can be used to resolve a double taxation situation.

The section includes:

  • Description of Mutual Agreement Procedure (MAP).

Description of Mutual Agreement Procedure (MAP)

MAP is a procedure whereby the tax authorities involved through negotiations seek to reach agreement on a transfer pricing double taxation dispute.

If an enterprise believes that measures taken by the tax authorities of one or both countries will result in transfer pricing double taxation, the enterprise may refer its case to the competent authority of the contracting state in which the enterprise is resident for the purpose of resolving the transfer pricing double taxation by MAP.

In many double taxation treaties, it is also possible to refer its case to the competent authorities in both contracting states. 

The term ‘measures’ is interpreted to mean that a case may usually be brought at the earliest as from the date on which a preliminary decision or similar is available. A settlement between an enterprise and a tax authority concerning a change in transfer pricing is also a measure that allows for negotiation with the competent authority of another country. The time limit for bringing a case will be counted as from the date of the ruling/decision.

Denmark has concluded double taxation treaties with most countries with which Danish enterprises trade. In addition, the EU Arbitration Convention, the EU Arbitration Directive, and the OECD’s Multilateral Convention (MLI) are also implemented in Danish law. How a MAP is referred and applied, as well as access to arbitration, therefore depend on the location of the contracting state, since MAP may differ within and outside the EU, respectively. See C.D.11.15.2.2.2 and C.D.11.15.2.2.3 in this respect.

If the competent authorities consider that the conditions for initiating a MAP exist, they are only obliged to seek to reach a solution that resolves the transfer pricing double taxation. On the other hand, they are not obliged to reach agreement on resolving the double taxation that has occurred.

However, enterprises have the opportunity for settlement by mandatory binding arbitration of disputes concerning transfer pricing double taxation which the authorities themselves cannot resolve, if one of the following instruments may be used:

  • Double taxation treaties (in which mandatory binding arbitration is agreed)
  • EU Arbitration Convention
  • EU Arbitration Directive
  • OECD’s Multilateral Convention (the MLI)

See also

  • C.F.8.2 concerning the OECD’s Model Tax Convention.
  • C.F.8.2.2.7 concerning income allocation for permanent establishments
  • C.F.8.2.2.9 concerning associated enterprises.
  • C.F.8.2.2.25 concerning the Mutual Agreement Procedure (MAP).
  • C.F.8.3 Multilateral Convention of 24 November 2016 to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (‘Multilateral Instrument’ or ‘MLI’)
  • A.A.6.1.4 Special confidentiality in international law regarding access to documents in MAP cases