Non-Discrimination in European and Tax Treaty Law

S. 64The commitment of the European Court of Justice (“ECJ”) to the construction of an internal market continues unabated as the number of cases concerning direct taxation is consistently on the rise. As the official legal monitor of the European Union (“EU”), the ECJ keeps watch on the tax laws of the Member States (“MSs”), thus ensuring their compliance with EU law, of which the fundamental freedoms and the prohibition of State aid are particularly relevant. According to the ECJ’s case law, the tax treatment of similarly situated intra-Union taxpayers must not entail any discrimination that would otherwise obstruct their enjoyment of the fundamental freedoms enshrined in the Treaty on the Functioning of the European Union (“TFEU”). In the ECJ’s analysis, determining whether taxpayers are “similarly situated” is a crucial element that may greatly influence the outcome of a case. This comparability analysis particularly relies on the choice of comparator and becomes challenging with respect to rules that apply to cross-border situations. In some of the cases, it may be difficult to identify the proper comparable situation. In that respect, rules aiming to neutralize the effect of hybrid...