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Traversa, Edoardo --- "Territoriality, abuse and coherence" [2020] ELECD 160; in HJI Panayi, Christiana; Haslehner, Werner; Traversa, Edoardo (eds), "Research Handbook on European Union Taxation Law" (Edward Elgar Publishing, 2020) 75

Book Title: Research Handbook on European Union Taxation Law

Editor(s): HJI Panayi, Christiana; Haslehner, Werner; Traversa, Edoardo

Publisher: Edward Elgar Publishing

Section: Chapter 4

Section Title: Territoriality, abuse and coherence

Author(s): Traversa, Edoardo

Number of pages: 18

Abstract/Description:

In this chapter, Edoardo Traversa explores the content and function of the principles of territoriality and prohibition of abuse of rights in EU tax law. Territoriality is a well-known concept in international (tax) law, less so in EU law, namely because the EU has no autonomous taxing powers. Apart from the notable exception of the Customs Union and, to a lesser extent, of the EU common VAT system, there is indeed no legal recognition of the EU territory as a single area for tax purposes. Territoriality, therefore, continues to refer to the taxing powers of the Member States, in particular as a justification to a restriction to the fundamental freedoms in the case law of the Court of Justice. Despite being conceptually distinct from the principle of territoriality, the prohibition of abuse of rights, a general principle applicable to all areas covered by EU law, serves a similar purpose in European tax law. In the case law of the Court of Justice dealing with the application of the fundamental freedoms on Member States’ tax systems, both principles are allowed as justifications and reflect the need to consider the financial interests of the Member States in an internal market where taxation remains largely unharmonized. As such, the gradual emergence of justifications based on the balanced allocation of taxing powers and on coherence offers interesting possibilities for future research.