On 24 September 2025, the German Federal Ministry of Finance (Bundesfinanzministerium) published an updated version of the guidance on International Mutual Agreement and Arbitration Procedures, titled “Merkblatt zu internationalen Verständigungs- und Schiedsverfahren (Streitbeilegungsverfahren) auf dem Gebiet der Steuern vom Einkommen und vom Vermögen”.

This updated guidance is designed to enhance clarity and efficiency in resolving cross-border tax disputes, demonstrating Germany’s commitment to promoting international cooperation and alignment with global tax standards.

Below is an overview of the key changes and implications.

Scope and legal basis

International tax dispute resolution covered under this guidance are Mutual Agreement Procedures (“MAPs”) and arbitration procedures for income and wealth taxes. They are based on the respective tax treaties (“DTA”), the EU Arbitration Convention, the EU Double Tax Treaty Dispute Resolution Act, and the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting.

Key Updates and Changes

1) Application Filing

• Applications for MAPs and arbitration procedures can now be submitted electronically via the BZSt online portal (BZSt online.portal), removing the previous requirement to provide three hard copies.
• In a German tax group (Organschaft), the application is generally to be submitted by the subsidiary (Organgesellschaft). The parent company (Organträger) does not enjoy treaty protection for the subsidiary’s income that is attributed to it. However, if transactions directly concern the parent, only the parent is entitled to submit the application.

2) Interaction with Prior Rulings and Factual Agreements

• Agreements on factual understanding from a previous tax audit,  prior unilateral agreements are not binding for the pursued procedure, if the tax interpretation of the facts changes during the resolution process.
• This flexibility allows new or differing information uncovered during MAP or arbitration procedures to be duly considered, ensuring fairness in the final outcome.

3) Implementation of Agreements

• The agreements reached can only be implemented on the applicant’s consent, which requires withdrawing any pending appeals and waving the right to appeal within 60 days, this remains unchanged.
• In cases involving tax groups, the tax group parent must also provide a declaration of consent.
• For transfer pricing cases filed by a foreign related party, declarations must still be submitted by the German counterpart.
• If the agreement relates to a partnership that is not itself entitled to treaty benefits, all parties who have the right to file an appeal must submit the required declarations—even if they are not the ones who applied for the procedure.

4) Update of the list of Arbitration Clauses

• The list of arbitration clauses in German Double Taxation Agreements (DTAs) has been updated with regard to Greece, Malta, Spain, Hungary, clarifying that arbitration proceedings under DTAs are not conducted if the cases already fall within the scope of the EU Dispute Resolution Directive or the EU Arbitration Convention, as these instruments take priority over DTA-based procedures, which is the case for Greece, Malta, Spain and Hungary. With regard to Japan, a memorandum on the application of arbitration proceedings under the tax treaty was published in June 2025.

A&M Observation and Recommendations

The possibility of submitting electronic application through the BZSt online portal marks a significant step towards modernization, streamlining the process for taxpayers to apply for an MAP.

For EU countries, EU dispute resolution rules take priority over treaty-based arbitration.

Affected taxpayers should carefully analyze these regulatory developments to explore the most suitable strategy to resolve double taxation, meeting all formal requirements and deadlines.

The updated guidance with mark-ups outlining the changes is available here.