A MAP application formally starts the mutual agreement procedure between the tax authorities of two countries. In the application, the taxpayer must demonstrate that the actions of one or both countries have resulted, or may result, in taxation that is not in accordance with the applicable double taxation treaty.
In our previous articles, we explained when the MAP procedure may help where the same income has been taxed in two countries
and which documents should be prepared before submitting a MAP request.
This time, we focus on the practical next step: when and how to prepare a MAP application and submit it to the Polish Ministry of Finance.
MAP application – when should it be filed?
A MAP application may be filed where the actions of one or both countries have resulted, or may result, in taxation that is not in accordance with a double taxation treaty.
It is not always necessary to wait until the tax has actually been paid in both countries. The procedure may also be initiated where double taxation is expected but has not yet fully materialised.
The filing deadline is determined by the relevant double taxation treaty. Under many treaties, the application must be submitted within three years from the first notification of the action resulting in taxation not in accordance with the treaty.
However, individual treaties may provide for a different deadline. Therefore, the three-year period should not be applied automatically without first reviewing the relevant treaty.
Before preparing the application, it is necessary to determine:
- which double taxation treaty applies;
- which event starts the filing deadline;
- when the taxpayer was first notified of the disputed taxation;
- which tax years and categories of income are covered by the case.
A taxpayer should not necessarily wait for the completion of all domestic tax or court proceedings. The MAP procedure is generally independent of remedies available under national law, while the treaty deadline may expire before proceedings in Poland or abroad are completed.
How to prepare a MAP application
A MAP application is not submitted on an official form. It must, however, contain the information required under Polish legislation and the guidance published by the Ministry of Finance.
The application should be prepared in Polish and should include the following elements.
Identification of the procedure
The document should clearly state that it is an application to initiate the mutual agreement procedure under the relevant double taxation treaty.
The legal basis should be identified, including the applicable treaty and, where possible, the relevant treaty provision governing the procedure.
Taxpayer’s details
The application should include:
- the taxpayer’s full name or company name;
- residential or registered office address;
- correspondence address;
- Polish tax identification number, if applicable;
- contact details.
Failure to provide an address that cannot otherwise be determined may result in the application not being considered.
Countries and tax periods concerned
The taxpayer should identify:
- the countries involved;
- the tax years or other accounting periods covered;
- the type of tax concerned;
- the relevant category of income or assets.
Date of the first notification
The application should state the date on which the taxpayer was first notified of the action resulting, or potentially resulting, in taxation contrary to the treaty.
This date is important because it allows the Ministry of Finance to verify whether the MAP application was filed within the treaty deadline.
Description of the facts
The facts should be presented clearly and chronologically. The description should explain:
- the source and nature of the income;
- how the income was taxed in Poland;
- how it was taxed or may be taxed in the other country;
- which tax authorities took the relevant actions;
- which decisions, assessments or adjustments were issued;
- how double taxation arose or may arise.
The Ministry should be able to understand when the income was earned, where it was reported, what position was taken by each tax authority and why the taxpayer considers the outcome inconsistent with the treaty.
Legal grounds and the taxpayer’s position
It is not sufficient merely to state that tax was imposed in two countries.
The taxpayer should explain which provisions of the double taxation treaty were applied incorrectly and why the resulting taxation is contrary to the treaty.
The MAP application should also present the taxpayer’s own position, including how the income should be taxed under the applicable treaty.
Depending on the case, the analysis may concern, for example:
- tax residence;
- permanent establishment;
- employment income;
- business profits;
- directors’ fees;
- capital gains;
- royalties;
- the correct method for eliminating double taxation.
Other proceedings
The taxpayer should provide information about any related:
- tax audits;
- tax proceedings;
- appeals;
- court proceedings;
- refund claims;
- proceedings conducted in the other country.
Copies of relevant decisions and judgments should also be disclosed.
Commitment to cooperate
The application should include a statement that the taxpayer will cooperate with the competent authority and provide additional information or documents within the deadlines specified by the Ministry of Finance.
The document should be signed and accompanied by a list of attachments.
What documents should be attached?
The application should be supported by documents confirming the facts described in the request.
Depending on the case, the attachments may include:
- Polish and foreign tax returns;
- tax assessments and administrative decisions;
- evidence of tax payments;
- tax residence certificates;
- employment, service or commercial agreements;
- income statements and payroll documents;
- correspondence with Polish and foreign tax authorities;
- documents relating to tax audits or court proceedings;
- calculations showing the income and tax reported in each country;
- evidence relating to the taxpayer’s residence or permanent establishment.
The documents should make it possible to connect the same income with the taxation imposed in each country.
Submitting two sets of tax returns without explaining the differences between them may not be sufficient to demonstrate that the treaty has been breached.
The Minister of Finance may request Polish translations of documents prepared in a foreign language. According to the Ministry’s guidance, attaching Polish translations of documents prepared in languages other than English may help expedite the procedure.
Where should the MAP application be submitted?
As a general rule, the application is submitted to the competent authority of the taxpayer’s country of residence. The wording of the applicable treaty should nevertheless always be verified, as some treaties may provide broader filing options.
Where Poland is the competent jurisdiction, the application is submitted to the Minister of Finance.
A paper application may be sent to:
Ministry of Finance
Income Tax Department
ul. Świętokrzyska 12
00-916 Warsaw
Poland
The application may also be submitted electronically through the official electronic delivery system used by the Ministry of Finance.
The application must be prepared in Polish. Filing a MAP request is not subject to a separate administrative fee.
The taxpayer may submit the application personally or act through an authorised representative holding appropriate authority to act in the specific procedure.
What happens after the application is submitted?
After receiving the MAP application, the Minister of Finance examines whether:
- the application was submitted to the correct authority;
- the treaty deadline was met;
- the request contains the required information;
- the case may involve taxation contrary to the treaty;
- the taxpayer’s position is sufficiently justified.
Where the application is incomplete, the Ministry may request additional explanations or documents.
Such requests should not be ignored. Failure to provide the necessary information, including after a repeated request, may result in the application being rejected.
If the Minister considers the application admissible and justified, the issue may first be resolved unilaterally under Polish law.
Where a unilateral solution is not possible, the Polish competent authority contacts the competent authority of the other country and starts bilateral consultations.
At that stage, the dispute moves from the taxpayer’s domestic case to discussions between the two tax administrations.
How can we help?
Preparing a MAP application requires more than collecting tax returns and decisions. The application must identify the specific treaty violation and clearly explain why the taxation imposed by one or both countries is inconsistent with the relevant double taxation treaty.
We can assist with:
- determining whether the case qualifies for MAP;
- verifying the filing deadline;
- analysing the applicable double taxation treaty;
- preparing a chronology of the case;
- reviewing tax calculations in both countries;
- drafting or reviewing the application;
- organising supporting documents;
- responding to requests from the Ministry of Finance;
- representing the taxpayer during the procedure.
A properly prepared MAP application should demonstrate not only that tax was imposed in two countries, but also why that taxation is contrary to the applicable international tax treaty.
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