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Guide to mutual agreement procedures

h. How long do I have to request the initiation of a mutual agreement procedure?

As a general rule, the time limit for requesting the initiation of a mutual agreement procedure is three years, starting from the day following the first notification of the tax assessment giving rise to, or which could give rise to, taxation that is not in accordance with a convention.

However, it depends on the type of procedure requested by the taxpayer, because, while both the Directive and the Arbitration Convention establish a time limit of three years, each Tax Treaty can stipulate a different time limit.

Article 8 of the Regulation on Mutual Agreement Procedures states that requests under an applicable Tax Treaty ‘shall be filed before the deadline set out in the relevant tax treaty, running from the day following the date of notification of the tax assessment or equivalent action notice that results or may result in taxation not in accordance with the tax treaty’.

Although the Tax Treaties applicable in Spain are consistent with Article 25 of the OECDMC, each of the tax treaties currently in force is unique.

The taxpayer must, therefore, look at the equivalent of Article 25 of the OECDMC included in the Tax Agreement applicable to the case, in order to find out what the time limit is for requesting the initiation of the procedure under the provisions of that particular Tax Treaty.

Example:The time limit for requesting the initiation of a mutual agreement procedure under the Tax Treaty with Portugal is two years.With the United States, however, it is five years.

For these purposes, it is necessary to take into account any amendments introduced by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the Multilateral Convention) in relation to mutual agreement procedures. The OECD website lists the Tax Treaties that have been amended by the Multilateral Convention (https://www.oecd.org/tax/treaties/mli-matching-database.htm).

In summary, the time limit will generally be three years, except where the procedure is requested under a Tax Treaty, in which case the time limit established in that particular Tax Treaty will apply.