Tax sovereignty : the extent of its consequential surrender to European Community jurisdiction

Abstract

The project I will be dealing with will initiate a discussion about the actual role of the European Court of Justice (ECJ) in the uniform application of EC law in the field of direct taxation within Member States. It is a form of investigation of the applications of EC law in the Member States and a trial to compare these applications on the basis of common issues. The goal of this study consists ultimately of focusing on the paradox inherent to Community law: How to achieve a uniform application of Community law despite the diversity in Member States' direct tax laws? Primarily, I will be investigating whether the ECJ's substantial case law in the field of direct tax law has had an actual and effective impact on the national and domestic tax laws in the various Member States. Secondly, a comparison of Member States reactions to the ECJ's rulings, especially in the light of the duty to implement the fundamental freedoms provided for in the EC Treaty, will be presented. Through this comparative study, the actual impact of the fundamental freedoms on the various member states' domestic tax ruies of nationai tax iaw systems wili be assessed. I will be presenting the experiences and findings of various countries of the EU in order to assess whether the EU Member States' direct tax landscapes have changed in accordance with the ECJ' s case law in direct taxation. There is a fast development and speedy evolution in European Union countries when it comes to Income Tax law. It is evident that there is no single symmetrical pattern and income tax law is thus no longer governed by an exclusive national set of rules. On the contrary, as opposed to separate national systems, one finds that complexity is increasing with the number of new Member States and hence the result is a sophisticated and pan European approach. Setting up an empirical study calls for both substantive and geographical limitations. Firstly, this study had to select certain topics and tax rules in relation to the Four Freedoms or the corporate tax directives, leaving aside many interesting cases dealing with VAT and other indirect taxes. Secondly, not all Member States of the European Union are covered in this study, and this for a variety of reasons. It should be noted that several Member States have never submitted any preliminary rulings to the ECJ in the field of direct taxation and it was assumed that the impact of Community law on their domestic tax landscape was, for this reason, quite small and therefore not interesting for this particular research (although this may be disputed). Furthermore, the aim of this study was not meant to cover all Member States but rather to include some that were "typical" or "symptomatic". The study will encompass a variety of Member States and a trip will be carried out across the European Union which will focus on the development of case-law based on observation and experiment. Through this empirical study there will be the sharing of experiences and reflections in order to assess the progress (or harm) done in direct tax law in our Member States. This is an attempt which will be representative of an evolution in the field of direct taxation and an effort to establish whether EU Member States' direct tax landscapes have changed in accordance with the ECJ' s case law relating to direct taxation.