Dispute resolution and arbitration

Anticipate, prevent and resolve disputes

The international tax landscape is going through fundamental changes. How is your enterprise adjusting to this new environment and anticipating any potential disputes?

We are seeing a significant increased level of challenge from tax authorities globally in the areas of economic substance (ES) and beneficial ownership (BO). Tax authorities regularly focus on cross border structures. Hence, it is highly likely that soon, in addition to ES and BO, they will seek to apply general anti-abuse rules and mechanisms like the Principal Purpose Test (PPT) in tax treaties. By applying those rules, tax authorities challenge e.g.:

Withholding tax rates under double tax treaties or beneficial ownership

the allocation of taxing rights for capital gains

tax residency of both parties (on the grounds of the place of effective management)

entitlement to exemptions under tax treaties or EU directives

In some cases, foreign investors might activate investment treaty arbitration as an alternative method of dispute resolution to protect their investments against cross border tax challenges.

The intensification of the above challenges stems from the OECD (Organisation for Economic Cooperation and Development) / G20 BEPS (Base Erosion and Profit Shifting) project, which led to implementation of many measures in domestic law and tax treaties (e.g. PPT) with the goal to put an end to tax avoidance and tax competition.

OECD / G20 Inclusive Framework (IF) countries agreed to adopt a coordinated Global Minimum Tax (GMT). Implementation is already in full swing, but several key questions remain open – e.g. on the interaction with other international treaties. Notably, these rules are very complex and inevitably increase the risk of multiple taxation.

This challenging tax environment leads to increased international transparency, an increase in joint audits, exchange of information between regulators and tax authorities and frequent case law on cross border tax cases. A great deal of technical expertise is needed to deal with these developments effectively, and it is essential that you are well prepared. Disputes can be prevented or resolved faster and more effectively by taking preventative measures and opting for the right methods. We can offer you worldwide support in managing tax inspections and avoiding and resolving tax disputes. PwC has a Global ‘Tax Controversy and Dispute Resolution’ (TCDR) network of experts active in all relevant areas in more than 80 countries. You can read more about this on the website of PwC Global.

We will prepare your enterprise for any possible disputes with tax authorities. We will assist your management in analysing potential tax risks to which the enterprise is exposed in various countries, and in developing a worldwide strategy to minimise those risks. We will do this in cooperation with your own specialists and the experts in our international network. We will assess your international group structure against the policy spearheads of tax authorities and assist you in documenting your tax positions to protect your enterprise in the case of tax audits and disputes.

PwC can help you by obtaining advance security – advance pricing agreements, (APAs), advance tax rulings - and supporting you for tax authority audits and preparing for them. Furthermore, we can help you in drawing up and concluding settlement agreements, thereby avoiding drawn-out disputes and protracted legal procedures. We can advise you on your rights and obligations in exchanges of tax information by tax authorities and will support you during joint audits. This is becoming increasingly important as the opportunities to do so are expanded.

Should a dispute nevertheless become unavoidable, there are several avenues, both at the national and international level, that can be taken to resolve it. PwC can advise you in this regard. Furthermore, PwC can support you in proceedings before the national court or the European Union’s Court of Justice as well as during international consultations or arbitration procedures such as mutual agreement procedures (MAPs) and investment treaty arbitration. Our worldwide network of experts includes legal (tax) and economic specialists, including those with significant experience in both private (law firms) and public (governmental authorities) sectors. We also look at alternative options and mechanisms to settle disputes involving bilateral, multilateral and international treaties, such as trade and investment treaties.

Get in touch with us if:

Your organisation is undergoing transformations. This could include mergers, demergers, acquisitions, international restructuring, the revision of the supply chain;