Introduction to European Tax Law on Direct Taxation

I. S. 28The attribution of competences and the integration of tax systems in the European Union

75

According to the principle of conferral, “the Union shall act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein. Competences not conferred upon the Union in the Treaties remain with the Member States” (Article 5(2) TEU). Since taxation is not mentioned among the competences that the Member States conferred on the Union (see Articles 3-6 TFEU), it remains within the competence of the Member States. Nonetheless, since the internal market is part of the shared competence of the Union and the Member States (Article 4(2)(a) TFEU) EU institutions can intervene in the field of taxation. Furthermore, the Member States have to exercise their powers consistently with the supremacy of Union law over national law.

76

When joining the European Union, Member States accept the gradual surrender of their sovereignty in the framework of a dynamic legal order that is proceeding towards supranational integration. Legal interpretation of primary law by the CJEU imposes growing legal constraints on the exercise of national sovereig...