Unlike the IMLI, Luxembourg law provides a single framework for resolving tax disputes when other EU Member States are involved. Compared to the EU Arbitration Convention, the new framework is seen as more effective, particularly in terms of access to POPs, the duration of the procedure and the time it takes to complete it. The process of mutual unification (POP) remains the most widely used way and the best way to eliminate double taxation. The effective use of PPIs by different instruments has been of interest to the OECD and the EU for more than 20 years. According to bePS, the number of double taxes is increasing and the number of POPs continues to increase. There is a growing emphasis on ensuring better dispute resolution techniques to more effectively eliminate double taxation. This article describes some of the features of the instruments currently available. In particular, Article 19 of the compulsory arbitration procedure must be mandatory if the competent authorities are unable to reach an agreement on the settlement of a case within two years of their start. This is a significant restriction on POPs cases in the past, as the competent authorities were only required to try to resolve cases and disputes could be resolved indefinitely. Section 19 ensures that treaty disputes will be resolved within a specified time frame, making the MAP a more attractive option for taxpayers. In addition, sections 20 to 25 provide for the practical functioning of arbitration. In the past, it was often practical constraints or a lack of agreement on how to proceed that blocked the solution. For more information on applying for a POP and exceptions for individuals, see Chapter 3.4 of the Tax Administration Guidelines on the Procedure for Mutual Agreement in the Case of International Tax Disputes.

Even in the event of an arbitration request, the EU review found that there could be many shortcomings in the system, including delays or lack of setting up the advisory committee and the lack of agreement on the appointment of the chairman of the advisory committee that delays or prevents the procedure. Historically, domestic tax remedies have been seen as the first approach to resolving international tax or transfer pricing disputes. Taxpayers have often initiated mutual agreement (POP) procedures to resolve a dispute and ensure security. The POP essentially offered a dispute resolution mechanism between the public authorities (amicable procedure), with the competent authorities striving to settle disputes relating to tax contracts on a consensual basis. The Arbitration Convention of the European Union (EU) establishes a procedure for settling transfer pricing disputes for EU member states. This procedure may apply in cases of double taxation between companies in different EU Member States. A POP may be initiated under a double taxation agreement (DTC) in force between Italy and a contractor, the essential feature of which is that the relevant competent authorities strive to eliminate by mutual agreement taxation that does not comply with the rules of the DTC (i.e. they are subject to a duty of due diligence).

The Mutual Agreement Procedure (MAP) is a procedure negotiated between the competent authorities of the contracting states of a tax treaty.