The Fight Against Harmful Tax Competition in the EU: A Limit to National Fiscal Autonomy?

The present Article analyses the legal instruments used at the EU level to tackle harmful tax competition in order to consider whether the EU action in this field is an undue limitation to national fiscal autonomy. State aid rules are the only “hard law” set of rules that have been used until now. As the Court of Justice stated in the Fiat case, the extensive notion of State aid adopted by the Commission in the assessment of tax rulings is an attempt of “backdoor tax harmonisation” that violates the Treaty provisions and national prerogatives in tax matters. On the other hand, forms of coordination between fiscal authorities, such as the Code of Conduct for Business Taxation, are not sufficient and corporate tax harmonisation is not achievable at the moment because of the lack of political will. The key contention of this Article is that the strategies and instruments put in place by the EU to tackle harmful tax competition are inadequate and, in the case of State aid, unduly restrict Member States’ fiscal autonomy.