Harmonization and Coordination of Corporate Taxes in the EU

An harmonized EU corporate income tax - i.e. a traditional tax aimed at raising resources for a common fiscal policy - is not attainable in the short term: the Treaty unanimity rule is an obstacle and the priority is constituted by the (unresolved) EU fiscal architecture. However the coordination of corporate taxes can prevent negative tax externalities at EU level and operates along three “dimensions”. The first dimension is defined as “intra-EU” and attains to intra-State mobility of persons and capital among different Member States but within the boundaries of the EU. The second dimension is defined as “EU-inbound” and refers to the policies of the EU as a whole vis-à-vis non-EU investors. The third dimension is defined as “EU-outbound” and refers to the policies of the EU as a whole in respect to EU investors (i.e. investors based in a Member State) and operating outside of the EU. The intra-EU dimension belongs to the traditional aquis communautaire in corporate tax matters, while “EU-inbound” and “EU-outbound” dimensions are emerging from recent EU initiatives as they relate to the shifting of profits across borders. So the EU coordination of corporate taxes is faced now with policies based on the OECD Beps project which might crystallize in binding legislation either at EU or national level. The Article describes this process by relying on a few preliminary concepts, such as tax competition, tax convergence and enhanced cooperation