Global tax disputes: evolving legal standards and strategic litigation trends

A report on a session at the IBA’s 15th Annual London Finance and Capital Markets Tax Conference held on 26 and 27 January 2026

Chair
Guglielmo Maisto, Maisto e Associati, Milan

Panellists
Alexander Bosman, Court of Appeal, The Hague
Alex Jupp, McDermott Will & Schulte, London
Sonja Schiller, Google, Seattle
Ricardo León Santacruz, Garrigues, Monterrey

Reporter
Elena Kool, De Brauw Blackstone Westbroek, Amsterdam

Introduction

The panel examined the evolving landscape of tax disputes. The session explored developments in regard to the Organisation for Economic Co-operation and Development’s (OECD) mutual agreement procedure (MAP) and arbitration mechanisms, particularly the impact of the European Union’s Directive (EU) 2017/1852 on the resolution of tax disputes. The discussion brought together diverse perspectives from the judiciary and private and corporate practice, providing insights into how tax disputes are resolved in different jurisdictions.

Dutch tax disputes landscape

Alexander Bosman began the substantive discussion on tax disputes by providing insights from the Dutch perspective, speaking in a personal capacity.

Trends in corporate tax litigation

Historically, most corporate tax cases in the Netherlands were settled before reaching the tax courts, with the tax authorities traditionally open to discussion and compromise. Cases were typically resolved at the objection phase or before reaching court. However, recent years have witnessed a shift, with an increasing number of cases reaching the courts, particularly concerning anti-abuse provisions (specific and general), as well as transfer pricing matters.

For instance, recent cases decided by the Dutch Supreme Court involve interest deduction limitations, such as the anti-base erosion rule, and last year the Supreme Court examined how a domestic anti-abuse provision reconciles with the general anti-abuse provision in Council Directive 2011/96/EU, otherwise known as the Parent–Subsidiary Directive, and the concept of abuse under EU law. Other examples involve the Dutch tax authorities successfully challenging private equity structures with excessive interest deductions based on fraus legis (the abuse of law doctrine). Transfer pricing cases also seem to be rising in number and are often framed by the tax authorities as avoidance cases rather than purely technical transfer pricing disputes.

Bosman explained that he has observed a shift in judicial attitudes, with courts currently appearing more willing to apply anti-abuse rules than before. The approach being taken by the Dutch tax authorities has also changed: tax inspectors are well-prepared, persistent and take well-substantiated positions, often arriving with large professional teams to court hearings. This suggests fewer incentives to compromise, particularly in fundamental cases where the tax authorities seek to establish precedent.

The interaction between domestic proceedings and MAP/arbitration

The interaction between MAP and domestic proceedings in the Netherlands is very limited. Taxpayers can pursue both procedures in parallel, with interaction essentially limited to the suspension of either procedure, normally at the tax authorities’ request. In practice, there is an incentive to pursue a MAP first; if unsuccessful, taxpayers can fall back on domestic court proceedings.

Procedural or substantive aspects of the MAP cannot be a point of contention in cases before a tax court, except the issue of access to the MAP. The competent authority may reject a MAP request in a particular case, and such rejection is open to appeal. Previously, the general administrative judge had jurisdiction in such cases. As of 2023, however, jurisdiction in this regard rests with specialised tax courts, which is a positive development since a core question in these disputes is whether taxation is potentially not in accordance with the treaty.

This matters because approximately seven per cent of MAP requests are rejected, meaning that these issues are not insignificant. Regarding arbitration as a backstop mechanism, the Netherlands has implemented Directive (EU) 2017/1852 on the resolution of tax disputes and the arbitration provisions contained in the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, otherwise known as the Multilateral Instrument (MLI), which have been effectively added to several tax treaties. This is a positive development from the perspective of legal protection. However, to Bosman’s knowledge, there have been no actual arbitration cases involving the Netherlands to date, although these new mechanisms are expected to lead to cases soon.

In regard to procedural matters, if taxpayers choose the MAP route, domestic proceedings can be suspended (normally at the tax authorities’ request) and courts are generally cooperative in granting suspensions. Regarding collection, taxpayers can normally obtain a deferral of payment when contesting a tax assessment.

Directive (EU) 2017/1852 on the resolution of tax disputes

Moderator Guglielmo Maisto highlighted the transformative impact of Directive (EU) 2017/1852 on the resolution of tax disputes compared to the MAP in tax treaties. If properly utilised, it allows taxpayers to complete the entire dispute resolution process in two and a half years. The mandatory arbitration provision provides certainty and puts pressure on tax authorities to resolve disputes.

An important innovation (at least for some Member States) is that even where taxpayers settle a case domestically, Directive (EU) 2017/1852 on the resolution of tax disputes creates an opportunity to reopen the settlement through arbitration. The arbitration result may require the tax authority to readjust its position to align with the arbitration panel’s decision, providing taxpayers with significant additional leverage. In the absence of the Directive, some contracting states begin a MAP but simply to allow the taxpayer to pursue a corresponding adjustment from the other contracting state.

A preliminary ruling is pending before the Court of Justice of the European Union (CJEU) in a Latvian case (C-497/25) concerning tax authorities’ discretion to reject arbitration where there is no double taxation. The scenario involves a participation exemption in the country of residence combined with source taxation prevented by the application of a treaty. Because there is only single taxation rather than double taxation, the competent authorities claimed discretion to reject arbitration. The referring court has asked the CJEU to clarify whether this constitutes arbitrary power to deny access to arbitration.

The UK perspective on tax disputes

Alex Jupp noted similar trends in corporate tax litigation in the United Kingdom, with hot topics (under audit) including transfer pricing, amortisation and the application of various exemptions. Statistics from 2024/2025 reveal that out of 34 judgments where His Majesty’s Revenue and Customs (HMRC) classified cases as involving anti-avoidance, 28 cases were won outright by HMRC, suggesting that the tax authorities achieve better success rates when framing cases as anti-avoidance matters.

Jupp emphasised several practical challenges. The timescales for resolving disputes through litigation can be protracted. Evidence production presents unique challenges: unlike some civil law jurisdictions, evidence of fact cannot generally be adduced beyond the First-Tier Tribunal in the UK, meaning all factual evidence must be prepared from the outset. This creates difficulties because key personnel move on, making it difficult to find the appropriate people, particularly when evidence concerns the subjective nature of corporate decision-making. The lesson: prepare evidence early.

The interplay between judicial review and a MAP presents challenges, making it difficult to intervene with a judicial review during MAP negotiations. However, there is significant emphasis from both the First-Tier Tribunal and HMRC on resolving and speeding up disputes through alternative dispute resolution (ADR), potentially on a limb-by-limb basis.

A corporate perspective on tax disputes

Sonja Schiller provided insights from a corporate perspective, speaking in a personal capacity.

Statistics are useful reference points for companies, whether concerning litigation timelines, MAP completion rates or advance pricing agreement (APA) statistics, for deploying resources.

Key factors when outlining litigation strategies

When evaluating litigation viability, companies evaluate the availability of due process and whether courts have experience in resolving tax-related technical issues. Forum considerations include the availability of favourable precedent, discovery rules and evidentiary considerations.

The nature of relief and importance and value of certainty is critical: is the issue a one-time occurrence or recurring? Precedential value extends beyond the immediate jurisdiction: even if a decision is not binding in other jurisdictions, it could have value where similar disputes arise. Publicity considerations are increasingly important, requiring effective management if publicity cannot be prevented.

Navigating uncertainty

Managing legal privilege cross-border is also important. Companies must identify when privilege applies and design best practices to preserve it. When compelled to produce privileged documents in one jurisdiction, companies should make clear that production is under duress to retain privilege claims elsewhere. This has become increasingly important in cross-border examinations and when dealing with information exchange requests.

Presenting consistent positions across jurisdictions and other regulatory or legal positions is important, where possible, or else being able to explain why different approaches were taken.

Companies must balance risk management with budget constraints when considering whether to deploy resources to achieve advance certainty.

Schiller emphasised increasing recognition across companies of the value of partnering with legal teams early to develop cases, especially when dealing with key issues that are material to the company. Preparing affirmative defensive positions for controversy before audit is something more and more companies are thinking strategically about and allocating resources to achieve.

A Latin American perspective on tax disputes: Mexico

Ricardo León Santacruz addressed the challenges in Mexico regarding certainty and the rule of law, particularly as a result of Mexico’s recent judicial reform according to which judges are being elected by popular vote, raising questions about judicial expertise. He also highlighted the need for attention to procedural rules that create challenges: evidence not introduced during administrative processes cannot be used in tax courts, requiring taxpayers to use administrative appeals to preserve evidence for potential litigation when developing a defence strategy.

A MAP can achieve an ‘adults in the room’ approach, although government officers in many jurisdictions face significant political and reputational pressures. Mexico lacks arbitration elements within its tax treaties. In one recent Canada–Mexico case, Mexico’s refusal to participate in a MAP led to North American Free Trade Agreement (NAFTA)/United States–Mexico–Canada Agreement (USMCA) arbitration, prompting taxpayers to consider the use of bilateral investment protection treaties as ADR mechanisms.

Despite the challenges, positive developments are emerging. Through the MLI, some Latin American countries are introducing arbitration as an ADR mechanism. The EU can potentially export rule of law principles and experience with dispute resolution mechanisms, which would be a welcome enhancement for legal certainty. A potential request to revisit the judicial reform might come out of the upcoming review and revisions to the USMCA. The third version of NAFTA is due to be renegotiated later this year.

The cost of litigation must also be considered. An example of this is Mexico’s recent reform requiring taxpayers to guarantee tax contingencies during any litigation, including MAP proceedings, through bank deposits with government-controlled banks, placing significant financial pressure on taxpayers.

Jurisdictional differences: common law vs civil law

Maisto emphasised that while there is often an assumption that the litigation environment is the same across jurisdictions, differences exist between civil law and common law countries regarding the relevant costs, timeframes and procedures. A point that was illustrated throughout the session by the experiences shared.