PURPOSE: to enable the accession of Bulgaria and Romania to the Convention of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises.

LEGISLATIVE ACT: Council Decision 2008/492/EC concerning the accession of Bulgaria and Romania to the Convention of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises.

CONTENT: the 2005 Act of accession of Bulgaria and Romania introduced a simplified system for the accession of Bulgaria and Romania to the conventions and protocols concluded by the Member States on the basis of Article 34 of the Treaty on European Union (previously Article K.3 of the Treaty on EU) or of Article 293 of the Treaty on EU.

Article 3(3) and 3(4) of the Act of Accession provide that, to that effect, the Council shall adopt a decision in order to determine the date on which these conventions shall enter into force for Bulgaria and Romania and to make all the necessary adjustments to these conventions required due to the accession of the two new Member States (which would include, in any event, the adoption of the conventions in the Bulgarian and Romanian languages, so that these versions can be "equally authentic").

Consequently, the Council adopted a Decision in order to adjust the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (the "Arbitration Convention") by reason of accession of Bulgaria and Romania. The Arbitration Convention will enter into force in relation to Bulgaria and Romania on 1 July 2008.

To that effect, the Council also adopted a Decision in order to include the Arbitration Convention in the 2005 Act of Accession of Bulgaria and Romania to the EU.

ENTRY INTO FORCE: the Decision shall take effect on 01/07/2008.

The European Parliament adopted, by 659 votes to 5 with 13 abstentions, a legislative resolution amending, in the framework of the consultation procedure, the recommendation for a Council decision concerning the accession of Bulgaria and Romania to the Convention of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises. The report had been table d for consideration in plenary by Mariela Velichkova BAEVA (ALDE, BG) on behalf of the Committee on Economic and Monetary Affairs .

Parliament stated that Arbitration Convention shall enter into force on the day following that of the publication of the Decision in the Official Journal of the European Union (rather than 1 January 2007) between Bulgaria, Romania and the other Member States in which the Arbitration Convention is in force. It shall enter into force between Bulgaria, Romania and each of the other Member States on the day on which the Arbitration Convention enters into force in the other Member State concerned.

The Committee on Economic and Monetary Affairs unanimously adopted the report by Mariela Velichkova BAEVA (ALDE, BG) amending, in the framework of the consultation procedure, the proposal for a recommendation for a Council decision concerning the accession of Bulgaria and Romania to the Convention of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises.

First of all, in the draft resolution accompanying the report, MEPs ask that the Council take into account Parliament’s concerns regarding the need to minimise the tax burden on taxpayers, when deciding on the date of application of the Convention of 23 July 1990.

They are also amending the date of entry into force of the amended Convention. In fact, the Commission’s proposed text suggests that the amended Arbitration Convention enters into force for Bulgaria, Romania and the Member States, according to the following schedule:

as regards the Member States for which the Arbitration Convention is already in force: 1 January 2007, as regards the Member States for which the Arbitration Convention is not yet in force: on the day the Arbitration Convention enters into force for those Member States.

This schedule implies that the Decision, when and if approved, will set a retroactive date of entry into force of the Arbitration Convention. Given that concerns have been expressed about such retroactive effect, it is suggested that the date of entry into force of the Arbitration Convention is set on the day following that of the publication of this Decision in the Official Journal of the European Union.

PURPOSE: to enable the accession of Bulgaria and Romania to the Convention of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises.

PROPOSED ACT: Council Decision.

CONTENT: the 2005 Act of accession of Bulgaria and Romania has introduced a simplified system for the accession of Bulgaria and Romania to the conventions and protocols concluded by the Member States on the basis of Article 34 of the Treaty on European Union (previously Article K.3 of the Treaty on EU) or of Article 293 of the Treaty on EU.

In fact, it is no longer necessary to negotiate and conclude specific accession protocols to these conventions (which would have implied ratification by 27 States): Article 3(3) of the Act provides simply that Bulgaria and Romania accede to these conventions and protocols by virtue of the Act of Accession.

Article 3(3) and 3(4) of the Act of Accession provide that, to that effect, the Council shall adopt a decision in order to determine the date on which these conventions shall enter into force for Bulgaria and Romania and to make all the necessary adjustments to these conventions required due to the accession of the two new Member States (which would include, in any event, the adoption of the conventions in the Bulgarian and Romanian languages, so that these versions can be "equally authentic"). The Council shall act on a recommendation of the Commission, after consulting the European Parliament.

Annex I to the Act of Accession gives the list of the conventions and protocols concerned. The list includes the Convention 90/436/EEC of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (the so-called Arbitration Convention), the Convention of 21st December 1995 on the accession of Austria, Finland and Sweden to the Arbitration Convention and the Protocol of 25 May 1999 amending the Arbitration Convention.

In the period preceding the accession of Bulgaria and Romania to the European Union, the Member States signed on 8 December 2004 a Convention on the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia , to the Arbitration Convention.

Therefore it is appropriate to provide for the accession of Bulgaria and Romania to the Arbitration Convention as amended by the Convention of 8 December 2004 and that Convention should be added to Annex I of the Act of Accession.

To that effect, and in line with Article 3(6) of the Act of Accession the Commission has prepared a proposal for a Council Decision to add to the list the Convention of 8 December 2004 on the accession of the ten new Member states to Convention 90/436/EEC. The Commission Recommendation for a Council Decision is intended to make the adjustments required due to the accession of Bulgaria and Romania to the aforementioned Convention, in accordance with Article 3(4) of the Act of Accession.