ARTICLE 25

Mutual Agreement Procedure

This Article provides for cooperation between the competent authorities of the Contracting States, as defined in Article 3 (General Definitions), to resolve cases of double taxation.

Paragraph 1 provides that if a resident of one of the Contracting States considers that the action of either or both States will result in taxation not in accordance with the Convention, he may present his case to the contracting State of which he is a resident. If the case concerns a complaint of discrimination by the State of residence on the basis of citizenship, he may present the case to the State of which he is a citizen. In any case, a person requesting assistance from the competent authority may also avail himself of any remedies under domestic laws. To be considered by the competent authority, a case must be presented within three years from the first notification of the action giving rise to the potential problem. If the potential taxation not in accordance with the Convention arises from a combination of decisions or actions by both States, the three-year period begins to run from the most recent notification of an action which will result in taxation not in accordance with the Convention.

The competent authority to which the case is presented is to review the case and, if the claim is justified, seek a solution either independently or in conjunction with the competent authority of the other States. Any agreement reached by the competent authorities will be implemented without regard to any time or procedural limitations of domestic law. Thus, for example, the competent authorities will waive the domestic statute of limitations to make a refund under a competent authority agreement. However, no additional tax will be imposed if the statute of limitations has expired.

Paragraph 3 authorizes the competent authorities to seek a mutual agreement on any difficulty arising in applying the Convention and on cases of double taxation arising from situations not directly dealt with in the Convention. For example, the competent authorities may agree to a common definition of a term used in the Convention, to the characterization of a particular item of income, to a common source rule, or to the appropriate allocation of deductions. They may also endeavor to coordinate the provisions of domestic law with respect to penalties and interest.

Paragraph 4 confirms that the competent authorities may communicate directly, including meeting together, for the purpose of implementing this Article.