European Union tax law attorneys still have a role
How can anyone need a tax lawyer in the European Union? Aren’t all the tax rules and rates the same for all member countries?
The principle that created the European Union was there should be common rules, laws and decisions and directives that applied to all member states, instead of having different, and often conflicting rules, etc. governing individual countries. This, however, does not apply to direct taxes, which includes income and corporate taxes. Each member state creates its own laws for direct taxation based upon their perceived need for revenue to meet social and other goals. The income tax rates for individual countries vary from just over 21 percent in Estonia and Latvia to over 60 percent in Portugal and Belgium. Corporate income tax rates vary substantially across the EU also. Hungary’s rate is 9 percent and France’s is 34.4 percent, with an average corporate tax rate in the EU of 22.5 percent.
However, the European Union seeks to ensure there is a free flow of goods, services, labor and capital throughout the Union. The European Union simply does not work if some countries have unfair advantages over other countries. Nor does the European Union want to see rules or taxes that discriminate against workers or businesses. The ability of workers to relocate to any EU country that offers the best opportunity is very much at the core of the philosophy behind creating a common market.
Double taxation disputes
If there is a cross-border difference in corporate income tax rates, there is an incentive to manipulate the tax system to be taxed at a lower rate. Therefore, there is an ongoing need for European Union tax law attorneys to represent the interests of both sides of the dispute. Of course, individuals still get into disputes with their governments over personal income taxes, and tax attorneys are needed to represent their interests before taxing authorities. In both cases, the attorneys are licensed to practice in a specific state, but, in the case of the corporate cross-border tax dispute involving double taxation (where two states claim the right to tax a company and assess redundant taxes), there are specialized procedures to resolve these disputes where obtaining the services of a tax lawyer are highly recommended.
As of July 2019, double taxation disputes are handled through the Mutual Agreement Procedure (MAP). Essentially, the taxing authorities involved in the dispute negotiate to resolve it to everyone’s satisfaction. If a resolution is not forthcoming, the taxpayer may request that an Advisory Commission be set up, consisting of taxing authority representatives and three knowledgeable individuals who are independent. The Advisory Commission reviews all the issues and delivers a ruling within six months.
The legal representatives of the company in the dispute, the European Union tax law attorneys, tell their client what to expect and how the process works. They know how to initiate the MAP Advisory Commission procedure. Double taxation disputes can cost tens of billions of Euros, and having a knowledgeable attorney is essential to getting a fair outcome.
Thevoz Attorneys is uniquely positioned to assist clients with double taxation disputes and any other legal need in the European Union due to our presence in both Switzerland and the United States. As an American and Swiss law firm, we have attorneys who are licensed and experienced in internationaltax law and American tax law. We understand the need for our clients to get a fair hearing before the taxing authorities in any country in which they operate and we work hard to see that they do.