e.4 Constitucion and Composition of the advisory commision

It is necessary to make a distinction here according to the instrument under which the mutual agreement procedure is conducted:

1. Mutual agreement procedures conducted under a Tax Treaty with an arbitration clause.

   In mutual agreement procedures conducted under a Tax Treaty that includes an arbitration clause, where no agreement is reached within the period established therein, the taxpayer may ask the competent authorities to set up such an advisory commission in order to reach a decision on the pending matters. The advisory commission will be governed by the provisions of the Tax Treaty and by the requirements agreed bilaterally in those conventions in which its existence is regulated.

2. Mutual agreement procedures conducted under the Arbitration Convention.

   As an exception to the general rule that the arbitration stage is initiated at the request of the taxpayer, except where the states concerned agree otherwise, the Member State that issued the first adjustment to which the mutual agreement procedure relates will set up the advisory commission, if the competent authorities have not reached an agreement after the two-year period.

   The time limit for setting up the advisory commission is six months from the end of the two-year period.

   As a general rule, the advisory commission will be formed of the chair, two representatives of each competent authority concerned and an even number of independent persons nominated by mutual agreement, or, where that is not possible, by drawing lots, from the list of persons drawn up for the purposes of the Arbitration Convention. In the case of drawing lots, the competent authority may reject any independent person for reasons previously agreed between the competent authorities of the Member States concerned or where that independent person:

   • belongs to one of the tax authorities involved or carries out functions on behalf of those authorities; or
   • has or has had a significant holding in one or each of the associated enterprises; or
   • is or has been an employee of or an adviser to one or each of those companies; or
   • does not offer a sufficient guarantee of objectivity for the resolution of the case.

   The list of independent persons for the purposes of the Arbitration Convention will consist of five individuals nominated by each contracting state, who must be competent, independent, citizens of one of the contracting states and reside in the territory in which the convention is applied.

   The chair, who must meet the conditions required in their country to hold the highest judicial offices or be a legal expert of renowned competence, will be chosen from the list of independent persons for the purposes of the Arbitration Convention by the representatives of the competent authorities and the independent persons. The chair may be rejected for the same reasons as the independent persons. 

3. Mutual agreement procedures conducted under the mechanism provided for in the Directive

   In accordance with Article 42 of the Regulation on Mutual Agreement Procedures, where the competent authorities have not reached an agreement within two years, the taxpayer may request that an advisory commission by set up. For that, they must submit a written request to the competent authorities of all Member States concerned within fifty calendar days of the day following notification that the competent authorities have not reached the agreement within the required time limit.

   The above notwithstanding, where the taxpayer is resident in Spain and:

   • is an individual; or

   • is not a large undertaking and does not form part of a large group, in accordance with Article 3(4) and (7) of Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013,

   they may submit the request solely to the Spanish competent authority, which, within two months, will notify the other competent authorities. The taxpayer will be deemed to have submitted the request for arbitration on the date of that notification.

   The advisory commission will be set up within 120 calendar days of the receipt of the request by the register of the competent authority and, once set up, its chair will inform the taxpayer of that fact without delay (Article 42 of the Regulation on Mutual Agreement Procedures).

   As a general rule, the advisory commission will consist of a chair, a representative of each competent authority concerned and an independent person appointed by each competent authority of the Member States concerned.

   The competent authorities of the Member States will appoint at least three individuals who are competent, independent and capable of acting with impartiality and integrity (Article 46 of the Regulation on Mutual Agreement Procedures) to draw up the list of independent persons for the purposes of the Directive, from which each competent authority will appoint an independent person to form part of the commission. In order to ensure the independence of the independent persons who are going to make up the commission, Article 45.4 of the Regulation on Mutual Agreement Procedures provides for the possibility of the competent authorities objecting to the appointment of any particular independent person for a reason agreed in advance between the competent authorities of the Member States concerned or where that independent person:

   1. belongs to or is working on behalf of one of the tax authorities concerned or was in such a situation at any time during the previous three years;
   2. has, or has had, a material holding in or voting right in the taxpayer’s company, or has been an employee of or adviser to any taxpayer concerned, at any time during the five years prior to the date of appointment;
   3. does not offer a sufficient guarantee of objectivity for the settlement of the matter or matters to be decided;
   4. is an employee with an enterprise that provides tax advice or otherwise gives tax advice on a professional basis, or was in such a situation at any time during the three years prior to the date of their appointment.

   However, it will not be possible to object to the nomination of an independent person if that person has been appointed in accordance with Article 47.1 of the Regulation on Mutual Agreement Procedures (Appointment by the Central Economic-Administrative Tribunal), although the Spanish competent authority may bring an appeal against such an appointment in the administrative court.

   Furthermore, independent persons are required not to be in a situation giving rise to any of the grounds relating to partiality mentioned above for twelve months following the date of the advisory commission decision.

   The representatives of the competent authorities and the independent persons that make up the advisory commission will choose the chair from the list of independent persons for the purposes of the Directive and that person will be a judge, except where the other members of the commission agree otherwise (Article 45.7 of the Regulation on Mutual Agreement Procedures).