In order to avoid double taxation, in parallel with the examination of a transfer pricing increase, a company had asked SKAT to conduct a Mutual Agreement Procedure under article 6 of the EC Arbitration Convention. SKAT refused the company’s request because the request did not include the necessary minimum information, see item 5 (a) of the Revised 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).

The high court found that the reference in article 7(1) of the EC Arbitration Convention to article 6(1) should be understood solely as a reference to the case ‘provided in a timely manner’ and did not indicate that the referral of the case required that the case also be ‘submitted’ in accordance with article 7(1). Furthermore, the high court found that the company’s complaint against double taxation was undoubtedly justified, so that SKAT’s refusal of the case was unfounded.

The Ministry of Taxation was therefore to instruct the Danish Tax Agency, the Competent Authority, to initiate and seek to complete a mutual agreement procedure on the basis of the company’s request.

In order to avoid double taxation, in ‘parallel’ with the examination of a transfer pricing increase, a company asked SKAT to conduct a Mutual Agreement Procedure under article 6 of the EC Arbitration Convention. SKAT refused the request on the grounds that the case was not submitted to SKAT before the expiry of the three-year period provided for in article 6 of the EC Arbitration Convention.

The company had appealed SKAT’s decision to the Tax Appeals Agency, but had at the same time - in accordance with SKAT’s guidance on legal action in the contested decision - taken the decision to the courts.

The high court found that the EC Arbitration Convention is covered by the provision in Executive Order no. 1029 of 24 October 2005 concerning double taxation agreements. SKAT’s decision thus could not be appealed to another administrative authority, but instead had to be referred to the courts, which did take place.

SKAT had refused the request to initiate the Mutual Agreement Procedure under the EC Arbitration Convention as not having been provided in a timely manner since the request did not include the necessary minimum information, see item 5 (a) (ii) of the Revised Code of Conduct for the EC Arbitration Convention.

The high court found that a justification requirement can be derived from article 6(2) of the EC Arbitration Convention.

Based on a specific assessment, the high court did not consider that the request could be deemed deficient with regard to the Code of Conduct’s requirements, and did not find that SKAT had sufficient grounds to refuse the request as not having been provided in a timely manner due to a lack of information.

A company requested that the Danish tax authorities initiate a Mutual Agreement Procedure with the tax authorities of Y1 country in order to avoid double taxation.

In contrast to article 25 of the OECD Model Tax Convention, article 24 of the double taxation agreement between Denmark and Y1 country did not contain a deadline for referral and a deadline interruption rule. The court found that a legal situation which completely disregarded national deadlines, including both the legal tax-related and general statutes of limitations, and where objections could thus in principle be raised indefinitely, had to be subject to very clear statutory authority. This statutory authority did not exist.

At the time of submission of the request for a Mutual Agreement Procedure, the national deadlines had expired, so that the Danish Tax Agency had rightly rejected the request for Mutual Agreement Procedure.

The case concerned SKAT’s refusal to initiate a Mutual Agreement Procedure between the competent authorities of Denmark and Germany under the EC Arbitration Convention.

The German tax authorities had increased the income of a German company in the 2001-2010 income years, as the company’s transactions with, inter alia, a Danish affiliated company had not taken place at arm’s length.

After SKAT had advised the Danish company on access to a Mutual Agreement Procedure (MAP) under, inter alia, the EC Arbitration Convention and the three-year referral deadline, the company requested SKAT to enter into MAP negotiations with the German tax authorities. The request stated that the company required MAP negotiations for the 2005-2009 income years. It was not until after the expiry of three-year deadline that the company notified SKAT that the MAP request was also to concern the 2001-2004 income years.

In view of the fact that there could be several reasons that an MAP request for all income years had not been submitted, and that the company was assisted by a firm of accountants which, prior to the expiry of the referral deadline, SKAT had asked whether an MAP request was lacking for the first income years, the court did not find that SKAT ought to have realised that the company had been misled and should have received more guidance than was actually given.

The Ministry of Taxation was therefore absolved from the company’s claim that SKAT should be required to initiate and seek achievement of a Mutual Agreement Procedure under the EC Arbitration Convention for the 2001-2004 income years.