Introduction to European Tax Law on Direct Taxation

S. 38I. The attribution of competences and the integration of tax systems in the European Union

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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” (Art. 5(2) TEU). Since taxation is not mentioned among the competences that the Member States conferred on the Union (see Arts. 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 (Art. 4(2)(a) TFEU), the EU institutions can intervene in the field of taxation as long as national tax measures create obstacles to the internal market. Such intervention may result, for example, in the adoption of Union legislative acts, some of the latest examples of which are Council Directive 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (hereinafter: ATAD) (see Chapter 8) and Council Directive 2017/1852 of 10 October 2...