Mutual Agreement Procedure (MAP)

The Mutual Agreement Procedure (MAP) is a dispute resolution mechanism embedded in tax treaties enabling the competent authorities of two contracting states to resolve disputes about the interpretation or application of the treaty — in particular cases of double taxation. The basis is Article 25 of the OECD Model Tax Convention.

• Application: Taxpayer files a request with the competent authority of its state of residence
• Time limit: Within three years of the first notification of the treaty-inconsistent taxation
• No guaranteed outcome: Authorities are only obliged to endeavour to reach agreement
• EU supplement: EU Arbitration Convention and EU Dispute Settlement Directive (2017/1852) supplement MAP within the EU

MAP was first codified as Article 25 in the OECD Model Tax Convention 1963 and has been a standard feature of tax treaties worldwide ever since. The BEPS project through Action 14 (2015) introduced minimum standards for MAP to resolve disputes more effectively and swiftly. The Multilateral Instrument (MLI) incorporated these standards into many existing treaties. Within the EU, the EU Dispute Settlement Directive (2017/1852) additionally introduces binding arbitration as a backstop. Since 2016, the OECD has been conducting peer reviews under Action 14 in two stages (Stage 1 and Stage 2) to assess each jurisdiction's MAP practices and drive improvements. In addition, the OECD has published annual MAP statistics since 2017, reporting on average case resolution times and the number of open cases.

MAP is available to any taxpayer (individual or company) who considers that the actions of one or both contracting states result in taxation not in accordance with the treaty, provided a tax treaty exists between the states involved. Typical cases include:

• Transfer pricing adjustments in one state without a corresponding adjustment in the other
• Withholding taxes in excess of the treaty rate
• Classification conflicts (e.g. PE existence disputes)
• Residence conflicts (dual residence)

• Request to the competent authority within three years (Action 14 minimum standard) of the notification of treaty-inconsistent taxation
• Presentation of the facts and the treaty violation
• Authorities endeavour to reach agreement within 24 months (Action 14 benchmark)
• If no agreement: arbitration (under MLI Articles 19–26 or EU Directive 2017/1852)
• Possible suspension of domestic court proceedings during MAP
• Peer reviews: Jurisdictions must undergo OECD peer reviews (Action 14, Stage 1 and 2) and implement recommendations
• Transparency: The OECD publishes annual MAP statistics on open cases, resolution times and outcomes

2 corrections:
- EU Arbitration Convention: date is signature, not entry into force
- Official OECD URL returns HTTP 403
1 update:
- Missing mention of OECD MAP statistics and peer reviews
4 clarifications.