Wednesday, April 2, 2014
Michael S. Knoll (Pennsylvania) presents Tax Discrimination in the European Union and Beyond (with Ruth Mason (Virginia)) at Washington University today as part of its International Tax Speakers Series hosted by Adam H. Rosenzweig:
The centerpiece of the 28-member European Union is the single market—a market free of internal barriers in which goods, capital, labor, and services move as easily between the member states as within them. The European Union’s highest judicial body, the Court of Justice of the European Union (CJEU), is charged with ensuring that the laws of the EU member states do not undercut the single market. The CJEU has interpreted various provisions contained in the foundational treaties of the European Union that create the single market to encompass a prohibition on tax discrimination. Over the last thirty years, the CJEU has concluded that numerous long-standing member state tax policies constitute prohibited tax discrimination. At the same time, the CJEU has failed to articulate a clear guiding principle in its tax discrimination cases. The combination of aggressive enforcement and the failure to provide clear guidance on the meaning of tax discrimination has attracted extensive critical commentary. Our goals in this essay and related work are to identify the guiding principle behind the CJEU’s interpretation of tax discrimination, to explain that principle in economic terms, to describe what strict adherence to that principle requires, to recommend to the CJEU how it should apply that principle in light of the legal and institutional constraints it faces, to apply our recommended approach to specific areas of the law, and to assess how closely the CJEU’s jurisprudence corresponds to our recommendations.