CJEU – Recent Developments in Direct Taxation 2019

1. S. 2 Introduction

The interaction between EU law and international tax law has always been a source of discontent and confusion for tax specialists. One may for example think of the groundbreaking Schumacker case of the CJEU (C-279/93) that shed new light on the generally accepted distinction in international tax law between resident and non-resident taxpayers. It should not come as a surprise therefore that the initiatives of the European Commission to review advance pricing agreements (“APAs”) of Member States have given rise to a substantial amount of critical commentary in academic literature.

Essentially, these initiatives of the European Commission are concerned with the interaction between EU State aid law (as laid down in Article 107 of the TFEU) and the norms of national and international tax law that regulate the allocation of profits within a multinational company (i.e “transfer pricing law”). Given the central importance of the arm’s length principle as the core of transfer pricing law, it is not surprising that the very introduction of the so-called EU arm’s length principle, as being an element of EU State aid law, has given rise to a substantial number of disapproving c...