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04 January 2023

MAP Procedures – What is inside the black box

The Mutual agreement procedure (“MAP”) is an important method of ‘dispute resolution’ in transfer pricing matters. We have several clients who have initiated a MAP or consider doing so. Starting a MAP is often perceived by taxpayers as a black box in terms of duration and chances of success.

MAP procedure

In this post we will shed some light on the content of this black box, based on statistics regarding MAP procedures that are publicly available on the website of the OECD in relation to 2019.

The statistics are quite encouraging: on average there is a 75% chance of fully eliminating double taxation within 15 months if a MAP in the area of transfer pricing is started in NL.
# of MAP procedures

The MAP is not a rare specimen: the total number of pending MAPs in the OECD countries per end of 2019 was around 7,000. Out of these around 3,700 related to transfer pricing, representing over 50% of all MAPs. In the Netherlands the relative portion of transfer pricing cases was somewhat lower with a total of 123 transfer pricing related MAPs pending compared to 193 cases related to other topics.

It may be assumed that the competent authorities in most countries have a significant amount of experience with this type of procedure by now.

Average duration

The average duration of transfer pricing cases in the context of a MAP is around 2.5 years. That is quite a significant period of time for an uncertain tax position to exist. However, in many countries – including the Netherlands – there is not necessarily a quicker alternative solution to resolve double taxation (e.g. Court litigation takes considerable time too).

It is noted that the average duration is not always a reliable indication of the duration of a specific procedure: this can be estimated more precisely based on the countries involved. In practice it is clear that some countries are much more forthcoming with processing and closing MAPs than other countries.

The average duration of recent transfer pricing related MAP procedures involving the Netherlands was between 14 and 15 months. Though outperforming the OECD average, the timeframe in excess of one year is still substantial. The chances of success are therefore an important factor in deciding whether a MAP is worth the investment of time and effort.

Chance of success

The overall percentage of MAPs where an agreement was reached fully eliminating double taxation was around 52%, where in a further 15% of cases unilateral relief was granted. This implies that OECD wide, approximately two-third of all procedures ended with double taxation being resolved.

In transfer pricing related MAPs involving the Netherlands the statistics are even better, with a success rate of approximately 75% of procedures ending with double taxation being resolved.

If you are interested in the statistics of any specific country, you may find them here:

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