Justice, Equality and Tax Law

S. 3261. Introduction

The EU is famously known for its single market concept which essentially consists of the four fundamental freedoms. While the fundamental freedoms ensure free movement of goods, services, people, and capital, taxation may pose a barrier to such fundamental freedoms. This is because the EU is not completely harmonized in the area of taxation. In limited cases, the EU has successfully harmonized taxes, particularly in the area of indirect taxes (e.g. the EU VAT Directive 2006/112/EC). This is not the case for direct taxes. Direct taxes are not harmonized at the EU level and the EU Member States generally maintain their tax sovereignty in this respect. Nevertheless, it must be noted that EU law has a significant influence on the domestic tax legislation of EU Member States.

While drafting domestic tax legislation, EU Member States have to keep in mind the competencies allowed by EU primary and secondary law. In addition to this, the CJEU’s case law plays an important role in shaping the domestic tax regimes of the EU Member States. The Court of Justice of the European Union’s (CJEU) rulings on tax matters are not only final but are also binding on all EU Member States, t...