ORGANISATION FOR ECONOMIC RESTRICTED CO-OPERATION AND DEVELOPMENT Paris, 23rd Hay, 1974 CFA(74)10 Scale 2 Or.Fr./Eng. COMMITTER ON FISCAL AFFAIRS REVISED TEXT OF ARTICLE 25 OF THE 1963 ECD DRART DO ACATION CONVENTION ON COME AMI CABTIT “ANS. OF THC COMMENT ONMENTARY THEREO! (Note by the Secretariat) Working Party N° 1 on Double Taxation of the Commit- tee.on Fiscal Affairs sdoyted at its 12th meeting a revised text of Article 25 (Mutual Agreement Procedure) of the OECD Draft Double Taxation Convention and of the Commentary thereon. The new texts attached are submitted to the Committee FOR ADOPTION at its session starting on 18th June, 1974, as was ‘the case for the series of Articles and Commentaries which have already been revised, Australia and New Zealand have reserved the right to indicate any reservations they may have at a later stage, : The Committee is also invited to forward this docu- ment to the Council with a recommendation that it should be derestricted, This will make it possible to include the new texts in the consolidated series of Articles and Coumentaries revised up to now vhich will be issued as a de-restricted document during the summer, Changes made as compared with the text of Article 25 of the 1963 Draft Convention are shown by underlining in the text of the Article and by sidelining in the Commentary,CPA(74)10 HUTUAL AGRERNENT PROCEDURE, 1 Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under raph 1 of Avticle 24, to that“Oi-tRe- Tor i Sotion piv: fo taxa Conveneton, ots ton not tn ace 2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at en appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any +t mits in the national Tavs Ge PURECOONUPRET INE STS Te ee ES BREE ES 3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 4 The competent authorities of the Contracting States nay communicate with each other directly for tae purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, euch exchance may take place through @ Commission consisting of represeniatives of the competent authorities of the Contracting Statee.~3- OFA(74)20 TT, SOUDETEARY OK ARBTOU 25 COFCMTITENG NH, NURUAT AGREEVENN YROUEDURE 1. Article 25 institutes a mutual agreement procedure for vesolving difficulties arising out of the application of the Convention in the broadest sense of the term. 2. It provides first, in paragraphs i and 2, that the com- petent authorities shall endeavour, by mutual agreement, to resolve the situation of taxpayers subjected to taxation not in accordance with the Convention. 3. Tt also, in paragraph 3, invites and authorises the con- Setent authorities of the two States to resolve by mutual agree- Yent problems relating to the interpretation or application of the Convention and, furthermore, to consult together for the elimination of double taxation in cases not provided for in the Convention. 4. Finally, as regards the practical operation of the mituel agreement procedure, Article 25, in paragraph 4, merely authorises the,competent authorities to commmicate with each other directly, without going through diplomatic channels, and, if it seems advicable to them, to have an oral exchange of opinions through a Joint Commission appointed especially for the purpose. 5. Since Article 25 merely lays dow. general rules con- cerning the mutual agreement procedure, the comments now follow- ing are intended to clarify the purpose of such rules, and also to amplify them, if necessary, by referring, in particular, to the rules followed at international level. in the conduct of mutual agreement procedures or at the internal level in the conduct of the + cedures which exist in most Member States for dealing with disputed clains regarding taxes. PARAGRArMS 1 and 2 6. The rules laid down in paragraphs 1 and 2 provide for the elimination in @ particular case of, texation which does not accord with the Convention. As is Imown, in such cases is normally open to taxpayers to litigate in the tex court, either immediately or upon the dismissal of their objections by the taxation authorities. When taxation not in accordance with the Convention arises from the misapplication of the Convention in both States, taxpeyero ere then obliged to litigate in each. State, insofar'as each eppears responsible for. such misapplica~ tion, with all the disadvantages and uncertainties that such a situation entails. .5o paragraph 1 of Article 25 makes; available: to taxpayers affected, without depriving them of the ordinary Tegal remedies available, 2 procedure waick io called the mutual agreement procedure because ii is aimed, in its second stage, at resolving the dispute on an amiceble basis, i.e. by agreementCPA(74)10 between competent authorities; be it said that the first stages ere conducted exclusively in the State of reeiucuce (except where the procedure for the application of paragraph 1 of Article 24 is set in‘ motion by the taxpayer in the State of which he is a national) from the presentation of the objection up to the decision taken regarding it by the competent authority. ™ In any case, the mutual agreement procedure is clearly a special procedure outside the ordinary donatic lag 2 filo that it can be set in motion solely in cases coming within paragraph 1 of Article 25, i.e. cases where tax hes been charged, or is going to be charged, in disregard of the provisions of the Convention. So where a charge of tax has been made contrary both to the Convention and the internal law, this case is amenable to the mutual agreement procedure to the extent only that the Convention is affected, unless a reletion exists between the rules of the Convention and the rules of the interna, law which have been misapplied. 8. In practice, the procedure applies to cases - uy far the most numerous ~'where the measure in question leads to double taxation waich it is the specific purpose of the Con- vention to avoid, Among the mo. common cases, mention must be made of the following: : - the questions related to attribution to a permanent establishment of a proportion of the executive and general administrative expenses incurred by the enterprise, under Article 7, paragravh 3: vaxation in the State ot tne payer ~ a4 . case of a special relationship between the payer and the recipient.- of the excess part of interest and royalties, under the pyovisions of Article 9 (associated enterprises), Article 11, pavagraph $ (interest) or drticle 72, paragraph 4 (royalties); * eases where lack of information as to the taxpayer's actual situation has led to misapplication of the Convention, especially in regard to the determination of fiscal domicile (Article 4, paragraph 2), the existence of a permanent establishment (Article 5), or the temporary nature of dependent personal services erformed. in the territory of the other Contracting Bate (Article 15, paragraph 2). 9. As vegards adjustments to be made correlatively with the xeinstatement of profits in the trading results of associated enterprises under the provisions of paragraphs 1 and 2 of Article 9, there is ground for considering that they: may properly be dealt with through the mutual agreement procedure when deter- mining their emount gives rise to difficulty. However, in such. case it appears logical to decide that the three-year time limit specified in paregraph 1 is inapplicable in such cases. * Portugal has temporarily reserved its position as regards this sub-paragraph.OPA (74)20."" 10. ‘The mutual agreement procedure is also applicable in the. absence of any double taxation contrary to the Convention, once the taxation in dispute is in direct contravention of a rule in the Gonvention, Such is the case when one State taxes e parti- - cular class of income in respect of which the Convention gives an exclusive right to tax to the other State even though the latter is unable to exercise it owing to a gap in its intexnal law. Another category of cases concerns persons who, being nationals of one Contracting State but residents of the other, are subjected in that other State to taxation treatment which is @iscriminatory under the provisions of. paragraph 1 of Article 24. 41, It should be noted that the mutual agreement procedure, unlike the disputed claims procedure under internal lew, can be set in motion by a taxpayer without waiting until the taxation considered by him to be "not in accordence with the Convention" has been charged against or notified to him. To be able to set the procedure in motion, he must, end it is sufficient if he does, eotablish that the "actions of one or both of the Contract- ing States" will result in such taxation, and that this taxation appears as e risk which is not merely possible but probable. Such actions mean ali acts or decisions, whether of @ legislative or a regulatory nature, and whether of general or individual application, having as their direct and necessary consequence the charging of tax against the complainant contrary to the provisions of the Convention. 12. To be admissible as to form, objections presented under paragraph 1 must first meet a twofold requirement expressly formulated, in that paragraph: in principle, they must be pre= sented to the competent authority of the taxpayer's State of _Pesidence (except where the procedure for the application of e paragraph 1 of Article 24, is set in notion by ‘taxpayer in whe State of which he 4s a national), and they must be so pre- sented within three years of the first notification of the aetion which gives rise to taxation which is not in accordance with the Convention, The Convention does not lay down any Special rule as to the form of the objections, The competent shthorities may preserve any special procedure they feel appro- priate, If no special procedure has been specified, the Sbiection may be presented in the same way as objections re- garding taxes are presented to the tax authorities of the State concerned, 15. ane requirement leid on the taxpayer to present his ease %0'the competent authority of the State of which he is the resi- dent (except where the procedure for the epplication of paragraph 1 of Article 24 is set in motion by the taxpayer in the State of which he is a national) is of general application, regardless of whether the taxation objected to has been charged in that or the other State and regardiess of whether it has given rise to double taxation or not. If the taxpayer should have transferred his fiscal domicile to the other Contracting State subsequently to the measure or taxction objected to, he must nevertheless still present his objection to the competent authori- ‘ty of the State of which he waco a resident during the year in respect of which such taxation has been or is going to be charged.OFS (74)10--' 44, However, in the case already alluded to where a person - who is a national of one State but a resident of the other com plains of having been subjected’in that other State to a measure or taxation which is discriminatory under Article 24, paragraph 1, it appears more appropriate for obvious veasons to allow him, by way of exception to the general rule set forth above, to present his objection to the competent authority of the Contracting State of which he is a national, bb. on the other nano, Contracting states may, if they consider it preferable, give taxpayers the option’ of pr-sent— ing their cases to the competent authority of either State. In such a case, paragraph 1 would have to be modified as follows: “1, where a resident of a vontracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accor~ dence with this Convention, he may, notwithstandin¢ the remedies provided by the national laws of those Statea, present his case to the competent authority of either Contracting State. This case mst be presented within three years fvom the first notification of the action giving rise to taxation not in accordance with the Convention 16, The time limit of three years set by the second sentence of paragraph i for presenting objections is intended to protect administrations against late objections. This time limit must be regarded as a minimum, s0 that Member Stetes are left free to agree in their bilateral’ conventions upon a longer period in the interests of taxpayers, e.g. on the analogy of the time limits eid down by their respective internal regulations in regard to tax conventions. Member States may omit the second sentence of peragreph 1 if they concur that their respective intemal regu- ations apply automatically to such objections and are more favourable in their effects to the taxpayers affected, either because they allow a longer time for presenting objections or because they do not set any time limits for such purpose. 17. _ The provision fixing the starting point of the three-year time limit os the date of the "firat notification of the action which gives rise to taxation not in accordance with the Con- vention" should be interpreted in the way most favourable to the taxpayer. Thus, even if such taxation should be directly charged in pursuance of an administrative decision or measure of general application, the time limit begins to run only from the date of the notification of the individual measure giving wise to such taxation, that is to say, under the most favourable inter- pretation, from the act of taxation itself, es evidenced by a notice of assessment or an official demand or other instrument for the collection or levy of tax. -If the tex is levied by deduction at the source, the time limit begins to run from shedie cPA(74)10. moment when. tue incowe ues ween yeid,. however, 17 the 23 Broves ‘hat only ata later ante" aid’ he kuow that the deduction hed been made, the timo limit wit. begin from that.date, “Fur thermore, where it'is the combination of decisions or actions taken in’ both Contracting States which gives riso to taxation not dn accordance with the Convention, it begins to run only Partin first notification of the most recent decision or 18. As regards the procedure itself, it is necessary to con- sider briefly the two distinct stages into which it is divided af, paragraph $). ion In une zarst phase, Yhacu opeue wath the presvivvation G2" the taxpayer's objections, tae procedure takes place exclu- sively at the level of dealings ‘between him and the competent authorities of his State of residence, (except where the proced= ure for the application of paragraph 1 of ‘Article 24 is set in motion by the taxpayer in the State of which he is a national). The provisions of paragraph 1 give ‘the taxpayer concerned the right to apply to the competent authority of the State of waich he is a resident, whether or not he has exhausted all the remed- des available to him under the intornal law of each of the two States. On the other hand, that competent authority is under an obligation to consider whether the objection is justified and (if it appears to be justified) take action on it in one of the two forms provided for in peragraph 2. 20. If the competent authority cuiy applied to recognises Ghat the complaint is jurified and considers that the taxation complained of is due wholly or in part to a measure taken in the taxpayer's State of residence, it must give the complainant satisfaction as speedily as possible by making such adjustments or allowing such reliefs es appear to be justified. In this situation, the issue can be resolved without resort to the mutual agreement procedure. On the other hand, it may be found useful to exchenge views and information with the competent authority of the other Contracting State, in order, for example, to confirm a given interpretation of the Convention. 21. If, however, it appears to that competent authority that the taxation complained of is due wholly or in part to 2 measure taken in the other Stete, it will be incumbent on it, indeed it will be its duty - as clearly appears by the terms of paragraph 2 - to set in motion the mutual agreement procedure nraner, 2: A taxpayer is entitled to present his case under pare— graph 1 of Article 25 to the competent authority of the State 6f which he is a resident whether or not he may also have made a claim or commenced litigation under the domestic legislation of that State, If litigation is pending, the competent cuth- ority of the State of residence should not wait for the final adjudication, but should sey whether it considers the case to ‘be eligible for the mutual agreement procedure. If it so de~ cides, it has to determine whether it is itself able to arrive | at an’ appropriate solution or whether tho case has to be sub- mitted to the comoctent authority of the other Contracting State.OPA(74)10, «5 -8 23.00.41 a c4a2m has byen finally adjudicate oy a Court in the: State "of residence, a taxpayer may wish even so to present or pursue a claim under the mutual agreement procedure, In. some States, the competent authority may be able -to’errive at ‘an appropriate solution which deperts from the Court.decision, © Tm other States, the competent authority is bound ‘by the Court decision. It my nevertheless present the case to the compe~ tent authority of the other Contracting State end ask the lat- ter to take measures for avoiding double taxation. 24, tn ave second stage - which opens wita the approach te | {ne other State by the competent euthority to which the taxpayer has applied - the procedure is henceforward at the ‘level of dealings between States, as if, so to speak, the State to which the complaint was presented had given it its backing. But while this procedure is indisputably én international procedure between States, it may, on the other hand, be asked = whether, ag the title of Article 25 and the terms employed in the first sentence of paragraph 2 thereof suggest, it is no more than a simple procedure of mutual agreement, or constitutes the implementation of a “pactum dé contrahendo" laying on the parties a mer auty to negotiate but in no way laying on them a duty +9 reach agreement, or whether, on the contrary, it is to be regarded (on the assumption of course that it tekes place within the framework of a Joint Commission) as a procedure of a jurisdictional nature laying on the parties ¢ duty to resolve the difference. 25. Paragraph 2 of Article 25 no doubt comprises a duty to negotiate; but as far as reaching agreement through the pro- cedure is concerned, the competent authorities are under a duty merely to use their best endeavours end not to achieve a zesult. However, Member States coulda agree on a more far-reaching commit- ment whereby the mutual agreement proce@ure, and above all the discussions in the Joint Commission, would produce a solution to the dispute, Such a rule could be established either by an amendment to paragraph 2 of the Article cr by an interpretation specified in a protocol or an exchange of letters annexed to the Convention, 26. In seeking a mutual egreement, the competent authorities must first, of course, determine their position in the light of the rules of their respective taxation laws and of the provisions of the Convention, which ere as binding on them as much as they are on the taxpayer, Should the strict application of such rules or provisions pre¢lude any agreement, it may reasonably be held that the competent authorities, as in the case of international erbitration; can;-subsidiarily, have regard to considerations of equity in ofder to give the taxpayer ‘satisfaction. : 27 ‘he pirposé of the ldst sentence of paragraph 2 is to enable countries With time limits relating to-reassessments and refunds in their-legislation to give effect to an agreement @espite such time limits. This provision does not prevent,CFA(74)20 however, such States as are not, on constitutional or other legal grounds, able to overrule internal time limits, from in- serting in the mutual agreement itself such time limite as are adapted to their internal statute of limitation, In certain extreme cases, a Contracting State may prefer not to enter into @ mutual agreement, the implementation of which would require that the internal statute of limitation had to be disregarded. Apart from time limits there may exist other obstacles such as ‘Pinel court decisions" to.giving effect to an agreement. Con tracting States are free to agree on firm provisions for the removal of such obstacles. 28. Finally, the case may arise where a mutual agreement is concluded in relation to a taxpayer who has brought a suit for {he same purpose in the competent court of either Contracting State and such suit is still pending. In such a cese, there would be no grounds for rejecting a request by a taxpayer that he be allowed to defer acceptance of the solution agreed upon as a result of the mutual agreement procedure until the court had delivered its judgment in the suit still pending. On the other hand, it is necessary to take into account the concern of the competent authority to avoid any divergence or contradiction ‘etween the decision of the court and the mutual agreement, with the difficulties or risks of abuse that they could entail, In short, therefore, it seems normal that the implemento~ tion of a mutual arreement should be made sup iects = to the acceptance of such mutual agreement by the fexpayer, and ~ to the taxpayer's withdrawal of his suit concerning the points settled in the mutual agreement. PARAGRAPH 29, ‘The first sentence of this paragraph invites the compe- | tent authorities to resolve difficulties of interpretation or application by means of mutual agreement and enables the authori-~ ties to enter into such agreement if possible. These are essentially difficulties of a general nature an@ concerning, or which may concern, one category of taxpayers, even if they have arisen in connection with an individual case normally coming under the procedure defined in paragraphs 1 and 2 of Article 25. 30. These provisions create no problem so far as concerns @ifficulties arising solely out of the application of the Con- vention. Such difficulties are to be taken to mean not only difficulties of a practical nature, end in particuler those which might arise in connection with the setting up and oper- ation of procedures for the refund of tax deducted from divi- dends, interest and royalties in the Contracting State in which they arise, but also all difficulties which could impair or impede the normal operation of the clauses of the Convention as they were conceived by the negotiators, and the solution of which does not depend on a prior agreement as to the inter pretation of the Convention.CRA(7)10" ; - 10 - AL. Under this provision the competent:authorities can,.in-: particular: - : -‘where a term has been expressly but incompletely or -sambiguously defined, in the Convention, complete or clarify its definition in order to. obviate any difficulty; x . . where changes in legislation have taken place in a State, settle any difficulties that may emerge in the new system of taxation arising out of such changes, without impairing the balance or affecting the substance of the Convention. 2. Paragraph 5 conrers on the “oi the Contracting states, "ise, ‘the ‘ministers of Finange or their si resentatives normally responsible ft ini Stration of the Convention, authority t resolve oy netust aatees ment any digfioultios arising as to tho interpretation of the Con- ne | However, S important not to lose sight that, deponding on’the internal law in'focos in fegher stems other authorities (iinistry of Foreign Affairs, courts) have the right to interpret international treaties and agreements as vell as the "competent authority" designated in the Convention, and thet this 4s sometimes tho exclusive right of ouch other author 52, Mutual agreements resolving general oifficulties ot interpretation or application are binding on administrations as long as the competent authorities do not agree to modify or rescind the mutual agreement. 34. In the second sentence of paragraph 3, a possibility is indicated for the competent authorities to deal also with such cases of double taxation es do not come within the scope of the : provisions of the Convention, Of special interest in this con- nection is the case of a resident of a third State having permanent establishments in both Contracting States. It is of course desirable thet the mutual agreement procedure should result in the effective elimination of the double taxation which can occur in such a situation. An exception must, however, be made for the case of Member States whose internal law prevents the Convention from being comgemented arpoints which are not covered in it expressly, ov at least by obvious implication, otherwise than by a protocol aubject, like the Convention itself, to ratification or approval. :oFA(74)10 PARAGRAPH by 35. | hie paragraph determines how the competent authorities may consult together for the resolution by mutual agreement, either of an individual ease coming under the procedure defined in paregraphs 1 and 2 or of general problems relating in parti- cular to the interpretation or application of the Convention, and which are referred to in paragraph 3. 36. It provides first that the competent authorities - who, As already noted, are authorised under paragraphs 2 and 3 to consult together to resolve by mutual agreement the various questions analysed above - may communicate with each other Uirectly. It would therefore not be necessary to go through diplomatic channels. 31. Such exchange of opinions will normally take place by fetter. However, if the competent authorities deem it useful, in order to reach an agreement more easily, they may also ~ as provided in the second centence of paragraph 4 - exchange views orally. They may, moreover, agvee that such exchanges’ should take place in a commission consisting of representatives of the said authorities. 30. As to this Joint Commission, paragraph 4 leaves it to the competent authorities of the Contracting States to determine the number of members and the rules of sitting and procedure of this body. 39. However, while the Contracting States are enabled to rule out all formalism in this field, it is nevertheless their @uty to give taxpayers whose cases are brought before the Joint Sommi saien under paragraph 2 certain essential guarantees, namely: ~ the right to make representations in writing or orally, either in person or through a representative; - the right to be assisted by counsel. 40. However, disclosure to the taxpayer or his representatives of the papers in the case does not seem to be warranted, in view of the special nature of the procedure. 41, Without infringing upon the freedom of choice normally enjoyed by the competent authorities in designating their representatives on the Joint Commission, it would be desirable for then to agree to entrust the chairmanship of each Delegation - \which might include one or more representatives of the service responsible for the procedure ~ to a high officiel or judge . chosen primarily on account of his specific experience; it io reasonable to believe, in fact, that the participation of such persons would be likely to facilitate reaching an agreement. AIDRAL OBSERVATION ‘the, Draft Convention has, on the whole, proved satisfactory, The most recent treaty practice shows: that it contains the maximum that Contracting States are prepared to jaccept. It must, however, be realised thet his procedure is notCFA(74:)10 - 12-5 yet entirely satiefactory from the taxpayer's viewpoint. This is because the competent authorities are required only to seek @ solution and are not obliged to find one (see paragraph 24). The conclusion of a mutual agreement depends to a large extent on the powers of compromise which the internal lew allows the competent authorities. Thus, if a convention is interpreted or applied differently in two Contracting States, and if the compe- tent authorities are unable to agree on a joint solution within the framework of a mutual agreement procedure, double taxation is still possible although contrary to the sense and purpose of @ Convention eimed at avoiding double taxation. 43, It is difficult to see how this situation could be pre- vented without going outside the framework of the mutual agree- ment procedure. The first approach to a solution might consist of seeking an advisory opinion: the two Contract: States would agree to ask the opinion of an impartial third party, although the final decision would still rest with the States. 44. The prévcions emboaied in this Convention, as well es the Commentaries annexed thereto, are the result of close inter- national joint work within the Committee on Fiscal Affairs, A possibility near at hand would be to call upon the Committ.e om Fiscal Affairs to give an opinion on the correct understandsn, of the provisions where special difficulties of interpretation arise as to particular points. Such a practice, which would be in line with the mandate and aims of the Committee on Fiscal Affairs with regard to the progressive elaboration of uniform law for the avoidance of double taxation, might well make a valuable contribution to arriving at a desirable uniformity in the application of the provisions. 45. It might alao be feasible to ask the opinion of certain persons acting as independent arbitrators. in the case of 0.E.C,D. Member States, the Committee on Fiscal Affairs could, for example, periodically draw up a list of persons from among whom the competent authorities of the two States concerned could choose the third party to be asked to give an advisory opinion, 46. In future, when a multilateral Convention may have been agreed upon, it aight be useful to consider more precise rules on such an international consultative procedure, or even to arbitration or ‘some international jurisdiction. Reservations on the article 47. Belgium reservee its position on the second sentence of paragraph 2, : Belgium considers that decisions concerning teliefs and revisions following from a mutual agree— ment ought to remain linked to time limits prescribed by domestic laws, which are usually fairly long, In Belgium this question is not dealt with specifically in the taxation field but gene- rally in the field of public accounting; it is governed by aPeete CFA 74)20 recent law (6th February, 1970) concerning time limits for the enforcement of claims against or by the State or its Provinces. This law is completely general in ite application, its provisions are mandatory and the national administzation has no power to make exceptions to it. In addition the need to provide at this stage of the procedure for special measures in favour of certcin taxvayers is not accepted. 48, _Canada makes a reservation on the last sentence of para- graph 1 of Article 25, In negotiating Conventions with other lembor countries, the Canadian authorities will propose a time- limit of two years for the presentation of a case to the compe— tent authority, Canada elso enters a reservation on the seccnd Sentence of paragraph 2. Indeed, Canada considers that the Amplonontation of a mutiial agreanént with the compotont auth ¢ other Contrac 9 ought to rem Gimecainsts prescribed by its domestic fav. eee 49 sweece makes & reservation on che seconu sentéfice o1 paragraph 2, Greece considers that the implementa- tion of relief or refunds following a mutual agreement should remain linked to time limits prescribed by domestic laws. This is governed by a fundamental public accounting lew which lays down time limits for the enforcement of claims. 50. Ireland reserves its position on the second sentence of pofagraph 2, In ireland the general time-limit for repayments of tax is ten years and it would not be practicable to agree to Q provision involving repayments without limit of time. j #2. Portugal reserves its position on the second sentence of poragreph 2, ortugal supports the opinion that decisions concerning reliefs and refunds following from a mutual agreement ought to remain linked to time limite prescribed by domestic laws, Portugal considers that its lavs on these matters prescribe fairly long delays and therefore should be applicable, with no exception, to every taxpayer. 52, Turkey makes @ reservation on the second sentence of ‘paregraph 2. Turkey's tax law provides that refunds of tax, like the assessment itself, must be made within @ specific period. According to these provisions, if the admini- stration finds an application for repayment acceptable, it must notify the fact to the taxpayer so that he can present his claim within a period of one year of such notification. If the tax- yer exceeds this time limit, his right to claim repayment apses. The eame procedure epplies to the enforcement of judge- ments of courte under which repayments are required to be made. That 1s why Turkey is obliged to fix a time limit for the implementation of agreed mutual agreement procedures as is done for all repayments. For this reason Turkey wishes to reserve the right to mention in the text of bilateral Conventions @ definite time limit as regards their implementation.