CJEU Case Law in Direct Taxation: Territoriality and Fundamental Freedoms

S. 11. Introduction

1.1. Research Aim

The establishment of an internal market is at the very heart of the European Union (EU). An internal market requires free movement of goods, services, persons, and capital, collectively known as the fundamental freedoms, as well as undistorted competition and harmonization of national laws insofar as disparities between the Member States impede the functioning of the internal market. These cornerstones are realized either by positive integration, i.e. integration through legislative acts, coordination, and cooperation or by negative integration, i.e. integration through the abolition of national measures not in line with EU law. With accession to the EU, states commit themselves to the obligations and rights provided for by EU law and give up their exclusive control over their territory. The impact of the EU on the Member States’ legal landscape differs among the legal fields. In direct taxation, positive integration has only selectively taken place, and the Member States’ sovereignty is widely preserved. Nevertheless, also in direct taxation, Member States must exercise their retained sovereignty in line with EU law, particularly with the fundamenta...