The IRS has published a new bulletin detailing a US.–Spain competent authority arrangement that operationalises treaty arbitration, clarifying which cross-border tax disputes qualify for arbitration, which are excluded, and the timing of its application.
The US Internal Revenue Service (IRS) has released Internal Revenue Bulletin No. 2026-6 on 2 February 2026.
The bulletin includes Announcement 2026-3, which sets out the Competent Authority Arrangement agreed between the US and Spain to implement the arbitration procedure under paragraphs 5 and 6 of Article 26 (Mutual Agreement Procedure) of the 1990 US–Spain tax treaty.
Spain and the US have entered into a formal arrangement to implement the arbitration procedure under paragraphs 5 and 6 of Article 26 of their bilateral income tax treaty. The arrangement sets out how tax disputes will be resolved through arbitration under the mutual agreement procedure, in line with the treaty, its protocols, and the accompanying memorandum of understanding.
Cases eligible for arbitration
The arrangement sets out the circumstances under which arbitration is available under Article 26 of the tax treaty. Arbitration may be used when a taxpayer has brought a case before the competent authority of their country of residence or nationality, the case involves taxation contrary to the treaty, and the competent authorities have been unable to resolve the issue through the mutual agreement procedure, provided that all treaty and procedural requirements are met.
Tax actions triggering eligibility include proposed adjustments, formal assessments, and tax withholding, and arbitration is not prevented by suspended tax collection during MAP or by prior discussions related to advance pricing agreements.
Cases not eligible for arbitration
Arbitration is not available for non-taxpayer-specific matters, cases deemed unsuitable for arbitration by both competent authorities, cases already decided by a court or administrative tribunal, disputes involving residence determinations under Article 4(3) of the treaty, or cases seeking relief from double taxation not covered by the treaty.
The arrangement was signed by the US on 20 November 2025 and by Spain on 12 December 2025, and took effect on 12 December 2025.
The arbitration provisions generally apply to cases submitted after 27 November 2019, the date the 2013 protocol introducing arbitration entered into force.
