The Dispute Resolution Mechanism (DRM) is an EU Directive that lays down rules for swiftly and effectively resolving disputes related to the interpretation and application of tax treaties for both businesses and citizens. The Directive is in force as of 1 July 2019.
The Directive covers issues related to double taxation – when two or more countries tax the same income or profits of a company or person. This happens, for example, due to a mismatch in national rules or different interpretations of transfer pricing rules in a bilateral tax treaty.
The DRM provides enhanced legal certainty for citizens and businesses by requiring Member States to comply with clear deadlines to agree on a timely and binding solution.