Firms in the EU are a step closer to having an effective and timely mechanism to resolve disputes resulting in their being taxed twice by different Member States.

The move follows a vote in the Economics and Monetary Affairs Committee, which was approved by 41 votes to 1, with 1 abstention. The Committee backed stricter deadlines, which Member States must meet to resolve disagreements over double taxation, an arbitration procedure to determine ongoing disputes, as well as the creation of an advisory panel whose opinion would be binding.

“These proposals are a big step towards solving the problem of double taxation, which inhibits the proper functioning of the single market.  But the Economics Committee wants to give national authorities added incentives to act quickly and move to resolution,” said Michael Theurer, (ALDE, DE), rapporteur of the draft report.

“The draft report calls for shorter deadlines and for no sanctions to be imposed on the taxpayer until a binding decision is reached,” he said.

Differences between the tax systems in Member States can result in firms in the EU being taxed twice on the same income or capital.  There are currently around 900 double taxation disputes in the EU involving more than € 10.5 billion, according to the European Commission.

The opinion of the Parliament will now be passed on to the Council for their consideration.