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Guide to mutual agreement procedures

e.2 Time period after which arbitration is triggered

Where the instrument in question provides for an arbitration stage to the mutual agreement procedure, that stage may be initiated if the competent authorities cannot, within a specific period of time, agree on a resolution to the matter to which the mutual agreement procedure relates.That period of time varies depending on the instrument under which the mutual agreement procedure is conducted.

In the case of procedures conducted under the Arbitration Convention and the Directive, that period will generally be two years.Article 7.4 of the Arbitration Convention provides that the competent authorities can agreed to exceptions to the period of two years, with the approval of the interested parties.In the case of the mechanism provided for in the Directive, Article 41.1 of the Regulation on Mutual Agreement Procedures allows the period of two years to be extended by one further year at the request, in writing and giving reasons, of a competent authority of the Member States concerned.

Furthermore, in the case of Tax Treaties that include an arbitration stage in the clause on mutual agreement procedures, the period of time stated in each Tax Treaties must be complied with.