The German Ministry of Finance has published a guidance letter dated 27 August 2021 on mutual agreement and arbitration (dispute resolution) procedures, which covers the initiation of procedures, the implementation of procedures, the implementation of agreements, etc. The guidance covers the dispute resolution procedures under tax treaties, the EU Arbitration Convention, and the domestic law implementing Council Directive (EU) 2017/1852 on tax dispute resolution mechanisms in the EU (the "EU-DBA-SBG")

Importantly, it is provided that dispute resolution procedures may not be initiated under the Arbitration Convention if already initiated under a tax treaty and vice versa. If applications are made simultaneously, the applicant is invited to choose within a reasonable time limit which procedure to continue with, otherwise the Federal Central Tax Office (BZSt) will choose at its discretion. Further, it is provided that procedures under the EU-DBA-SBG supersede those under a tax treaty or the Arbitration Convention. If a request is made under the EU-DBA-SBG, proceedings under a tax treaty or the Arbitration Convention must be terminated and after proceedings under the EU-DBA-SBG are completed, any further applications under a tax treaty or the Arbitration Convention will be rejected as inadmissible. If applications are made simultaneously under the EU-DBA-SBG and under a tax treaty or the Arbitration Convention, the applications under the tax treaty or the Arbitration Convention will be rejected. This priority only applies to the extent that the EU-DBA-SBG is applicable.

Another important aspect of the guidance is that under most of Germany's tax treaties, the Arbitration Convention, and the EU-DBA-SBG, an application for a dispute resolution procedure must be submitted within 3 years after the first act/notification leading to a dispute. Where a tax treaty does not specify a limitation period, a dispute resolution procedure must generally be applied for within 4 years.