Part II

Koen LENAERTS, “United in diversity” - Also in fiscalibus?
As Community law stands at present, direct taxation falls within the competence of the Member States. However, it is now settled case-law that Member States must exercise that competence in a manner consistent with Community law. And it is for the European Court of Justice (ECJ) to control respect by the Member States of the provisions of the EC Treaty on free movement: freedom of establishment, free movement of workers, freedom to provide services, free movement of capital and free movement of citizens in the European Union.

Therefore, without justification based on a matter of overriding general interest, such as the need to safeguard the cohesion of the tax system or the fight against tax fraud, tax legislation of the Member States which restricts free movement in the host State or in the home State is prohibited. This prohibition relates to both taxation of natural persons and corporate tax.

On the basis of an analysis of the case-law of the ECJ, it is intended in this contribution to bring to light the key principles of the impact of Community law on direct taxation and it is submitted that also in fiscalibus both unity and diversity characterise the European Union.
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