Introduction to European Tax Law on Direct Taxation

S. 40I. 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 competenceof the Union and the Member States (Art. 4(2)(a) TFEU), the EU institutions can intervene in the field of taxation in order to ensure the proper functioning of the internal market. For this purpose, national tax laws and regulations can be harmonized; the recent efforts in this regard led to harmonization in the fields of administrative assistance, anti-tax avoidance measures and dispute resolution. Furthermore, the sovereignty of the Member States is constrained by the fact that, in tax matters, like in any other policy area, they have to exercise t...