Non-Discrimination in European and Tax Treaty Law

I. S. 244Introduction

Exit tax regimes are an expression of the European Member States’ sovereignty in the field of direct taxation. This sovereignty is, however, not unlimited and the Member States have to respect EU law. Since the European Court of Justice has broad powers of control in the area of direct taxation based on the fundamental freedoms, the Member States also have to respect the interpretation of EU law given by the Court when designing such a regime. One could thus wonder what the requirements for exit taxes are for them to be compatible with EU law, and especially the freedom of establishment as laid down in Article 49 TFEU.

Initially, there were no cases clarifying the issue of the compatibility of exit taxation with EU law. Nevertheless, some clues could be found in cases dealing with company law, e.g. the Daily Mail and Überseering cases, or cases dealing more generally with the freedom of movement, e.g. the X and Y case. The question of the compatibility of exit tax regimes was first clarified by the Court in de Lasteyrie du Saillant in 2004, followed in 2006 by the N. case. As both cases only dealt with exit tax regimes for individuals, some doubts arose as to whether ...