A new Protocol modifying certain provisions of the income tax treaty between the United States of America (U.S.) and the Federal Republic of Germany (Germany) came into force on December 28, 2007. Among other things, the Protocol modifies Article 25 (Mutual Agreement Procedure) to provide for mandatory arbitration of certain cases in the mutual agreement procedure (MAP).
The competent authorities of the U.S. and Germany recently signed an arrangement regarding the application of the arbitration procedure. The purpose of the arrangement is to provide guidance under which the U.S.- German arbitration procedure will operate. In addition to the arrangement,