Introduction to European Tax Law on Direct Taxation

I. S. 2The Nature of the EU Legal System

A. Supremacy

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As the EC Treaty (the predecessor of the Treaty on the Functioning of the European Union (hereinafter TFEU)) was silent on the issue of the relation between EU law and national legal orders, the CJEU has had to clarify it. In the Costa v E.N.E.L. case the Court made clear that …the law stemming from the Treaty … could not…be overridden by domestic legal provisions… and in the case of a conflict between an EU law provision and a national provision the former takes precedence over the latter. Later, the Court further clarified that every national court is obliged to apply EU law “in its entirety and protect rights which the latter confers on individuals and must accordingly set aside any provision of national law which may conflict with it, whether prior or subsequent to” the EU law provision. In addition, the Court held that an EU law provision even takes precedence over a national constitutional provision. According to the subsequent jurisprudence of the CJEU, the national administration is also required to ensure the supremacy of EU law over national law.

B. Direct Effect

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A directly effective provision of EU law confers legally enforce...