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Wattel, Peter J. --- "Taxation in the internal market" [2017] ELECD 278; in Koutrakos, Panos; Snell, Jukka (eds), "Research Handbook on the Law of the EU’s Internal Market" (Edward Elgar Publishing, 2017) 319

Book Title: Research Handbook on the Law of the EU’s Internal Market

Editor(s): Koutrakos, Panos; Snell, Jukka

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781783478095

Section: Chapter 15

Section Title: Taxation in the internal market

Author(s): Wattel, Peter J.

Number of pages: 31

Abstract/Description:

On an abstract level, taxation within the EU internal market looks rather orderly: the Union has no taxing jurisdiction itself, but national indirect taxation has been harmonized or uniformly regulated at EU level because the successive European treaties rightly required it (free trade is impossible without harmonization of transaction taxes). As for direct taxes, they fall within the scope of national sovereignty: the successive Community and Union Treaties ignored direct taxation; the large Member States in particular did not and do not see the merits of direct tax harmonization as balanced against the ensuing loss of national sovereignty, and, in any case, every Member State has a veto right in tax matters (Article 114(2) TFEU). On a practical level, however, things appear less neatly arranged, especially as regards direct taxation. First, because of the virtual absence of harmonization in that field, the Court of Justice was impelled to develop an impressive body of case law (some 250 cases by now) arbitrating the resulting conflict between free movement rights and national tax sovereignty, especially national tax base protection against profit shifts and tax planning. Regrettably, that case law is quite inconsistent.