Elimination of double taxation within a short and certain timeframe, even in the case of an adhesion assessment, thanks to the new European mutual agreement procedure.
With the publication of the order of the director of the Revenue Agency prot. no. 381180/2020 of Dec. 16/2020, Legislative Decree 49/2020, by which the Italian legislator implemented Directive (EU) 2017/1852, was made operational. This is an instrument applicable to matters relating to the 2018 and subsequent tax years, for all cases of intra-EU double taxation arising from the interpretation and application of (i) international agreements and conventions for the avoidance of double taxation on income and capital; and (ii) Convention 90/436/EU of July 23, 1990, on the elimination of double taxation in the case of adjustment of profits of associated enterprises.
The office responsible for handling the new petitions has been identified as the International Dispute Resolution and Prevention Office, Control Sector, of the Large Taxpayers Central Directorate in Rome.
In this way, the taxpayer-taxpayer adversarial process can potentially extend throughout the mutual agreement procedure, increasing the chances of finding an understanding between administrations that can eliminate double taxation within the stipulated timeframe, i.e., within two years (extendable by one year) from the granting of the initial request.
If no agreement is reached, the agency is required to communicate the general reasons for the impasse, and the taxpayer has the option of requesting the intervention of an advisory commission, aimed at promoting the resolution of the dispute.
The exchange and cooperation between the IRS and taxpayer will determine the success or failure of this new procedure, which has great potential.
