CJEU – Recent Developments in Direct Taxation 2022

1. Introduction

It is not a secret that Finance Ministries of the EU Member States consider the direct tax case law of the European Courts to be a significant incursion into their sovereign right to tax intra EU cross-border income flows. This may help explain their rather defensive attitude and hesitance to comply with that case law, let alone to systematically revising their tax legislation in such a way that it is fully compatible with the EU Treaties.

From a European point of view, however, that position and the corresponding hesitance to apply European law are rather surprising because a broad analysis of the direct tax case law shows that the European Court has, in fact, been very accommodating to the EU Member States in its tax case law, and that it has gone out of its way to respect Member States’ direct tax sovereignty. This is clear both from at least four broad lines in that case law (section 2.) and from a number of specific decisions in which the Court seemed to fall out of line with its own precedent, without clearly indicating that, and why, it was changing its mind (section 3.).

2. Broad lines of direct tax case law that respect sovereignty

There are at least four broad lin...