Non-Discrimination in European and Tax Treaty Law

I. S. 88Introduction

One of the main EU goals is the establishment of an internal market without frontiers where persons can freely move and companies can be freely established (free movement and freedom of establishment) in the Member State of their preference without restrictions. Admittedly and not only in the area of direct taxation, Member States tend to protect the taxing powers granted by their national legislation or by bilateral treaties over entities established in their territory. Member States often adopt provisions which are determined as restricting the fundamental freedoms. Such provisions may still be compatible with the Treaty freedoms if they are justified and proportionate. In direct tax matters the ECJ (Court) has developed various justifications which in their specific substance are not always clear and which may overlap each other. However, behind these justifications there still remains symmetry (or tax base integrity) as the main objective of the Court. This means that if Member States do not tax foreign profits, they do not need to consider foreign losses either (except final losses). The essence of that symmetry principle and justifications accepted by the Court...