Testing the Maturity of EU Corporate Tax Law : A Principle-Based Legislation in the EU Context?

This contribution makes the attempt to elaborate a diagnosis on the maturity of the EU corporate tax, as the result of the interplay between negative and positive integration. To accomplish this task, the contribution makes recourse to the concept of “Principle-Based Legislation” (“PBL”), which stems from the Dworkin’s distinction between rules and principles. Importing this concept to an scenario of economic integration offers an insightful benchmark. In more than 60 years of the EU, the focus of the integration has switched from the creation of the internal market to the protection of internal market, which is currently identified with the protection of domestic tax bases as a result of the BEPS measures. Therefore, principles such as neutrality and territoriality are constantly competing into a malleable notion of internal market. The protection of the internal market is channelized through the principle of territoriality, which is linked to the prohibition of abusive practices derived from the Danish Cases (N Luxembourg 1 and T Danmark). Protecting the internal market undermines the principle of neutrality. The dialectic battle between neutrality and territoriality damages the resilience of the EU corporate tax system under 3 prongs: lack of coordination, the progressive elimination of the distinction between Primary and Secondary law and distorting bilateral solutions in DTCs. In the author’s view, reinforcing neutrality not only becomes crucial to strength our EU corporate tax system, but also becomes the necessary foundations to build up the long-desired EU taxes. In the forthcoming years, we would see whether the pendulum swings again toward neutrality, which is baptized by the Court in the judgment Bevola as the EU ability to pay principle