The Mutual Agreement Procedure is often mentioned in the literature dedicated to the topic of the avoidance of double taxation. The MAP Procedure is of very great importance. Indeed, it aims to eliminate taxation inconsistent with the provisions of double taxation conventions, and thus to prevent double taxation.
1. Mutual Agreement Procedure
The name “MAP Procedure” comes from its English name: “Mutual Agreement Procedure”, which means “Mutual Consultation Procedure”.
In the framework of the Procedure, the appriopriate national authorities seek to remove taxation inconsistent with the double taxation convention between their countries, and therefore, to eliminate double taxation.
The MAP procedure is regulated in double taxation conventions. Due to the fact that most double taxation agreements to which Poland is a party are based on the OECD Model Convention, their provisions are similar and differ only in details. The provisions of double taxation convention conerning the MAP procedure are supplemented by the Act of 16 October 2019 on the resolution of double taxation disputes and the conclusion of advance pricing agreements (Official Journal of 2019, item 2200, as amended).
2. MAP procedure and national procedures
The MAP procedure has an international character. Indeed, the tax administrations of the countries concerned participate in it. In Poland, the competent authority is the Minister responsible for public finances.
This method of dispute resolution doesn’t depend on the procedures provided for by national law. Only the appropriate national entities – tax administration authorities and courts – participate in those procedures.
The national procedure and the MAP one can be in progress at the same time. However, it shall be remembered that a final court judgment is binding on the Minister of Finance. In practice, this means that if a Polish court resolve the matter, the Minister of Finance is bound by the judgment’s content when conducting negotiations.
3. Application
The MAP procedure is initiated at the taxpayer’s request. The application shall be submitted within the time limit specified in the appropriate double taxation convention. Usually, this period is 3 years, counting from the date of the first notification of the action resulting in taxation inconsistent with the provisions of the agreement. Some double taxation conventions provide for different time limit. For example, the treaty concluded between the Government of the Republic of Poland and the Italian Government provides for a period of 2 years.
The application shall be submitted in paper or electronic form. There is no fee for this.
The request shall be accompanied by copies of documents concerning the circumstances described therein, including copies of documents issued by the tax authorities.
The application should be prepared in Polish, unless the Minister of Finance permits the submission of documents in foreign language. The Minister of Finance may require the applicant to present a translation of the documents into Polish or into the chosen foreign language. In such a case, the applicant is obliged to prepare the translation at his/her own expense.
4. Representative
The applicant may act through a representative. In such a case, the application shall be accompanied by a specific power of attorney, i.e. one from which it results that the representative has been authorised to act in the framework of a strictly defined procedure for resolving double taxation disputes. The power of attorney should indicate the data indentifying the principal and the representative, including their tax identificator numbers, and if the representative doesn’t have a tax identification number – the number and series of the passport or another document confirming identity either another identification number. It’s also necessary to specify the representative’s address for service in the power of attorney.
The power of attorney shall be attached to the first letter submitted by the representative, unless it has already been provided by the principal.
5. Course of the procedure
In the first place, the Minister of Finance checks whether the application satisfies the formal requirements. In the event of non-compliance with them, the applicant is asked to complete the missing information. Failure to do so will result in the request being rejected.
The Minister of Finance also analyses the circumstances indicated in the application and examines its validity.
Then, negotiations between the Minister of Finance and the competent authorities of the countries concerned take place. Their goal is to conclude an agreement and eliminate any inconsistencies with the provisions of the double taxation convention.
6. Legal notice
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