The Effect of Positive EU Direct Tax Harmonisation on Member States’ External Competence

The EU has recently started to initiate (proposals for) directives to partially harmonise the corporate tax regimes across the Union.

Some of these directives have already entered into force, others are still pending.

In principle, the Member States are competent to establish their individual preferred direct tax system (internally) and to conclude international agreements with both other Member States and third states in direct tax matters, the so-called double tax treaties (externally).

The EU only intervenes when the internal market is at stake. Until recently, this only happened occasionally and in very specific circumstances.

The new European measures, however, go much further (e.g., by attempting to harmonise the taxable base of large companies within the EU). The question arises whether the EU is indeed competent to do so and/or is, by issuing such directives, expanding its internal and, more importantly, even its external competence.

The doctoral research project will endeavor to answer this question by, first, analyzing the current competence attribution in direct tax matters within the EU.

If the EU would appear to be attributing itself increasing competence in the field of direct taxation, a question also surfaces on the correlation to the double tax treaties concluded prior by the Member States as the EU proposals largely cover the same issues. The research project will assess the interaction and possible conflicts of the EU measures with these double tax treaties and will analyse the potential international liability of the Member States arising therefrom.

The research project will conclude with answering the main research question as to the effect the EU harmonisation initiatives have on the Member States’ external competence and to what extent the EU has gained external competence in direct tax matters.