EU Corporate Tax Harmonisation

Abstract

Several problems arise from each Member State having their own corporate tax system and they have received increased publicity due to LuxLeaks and other scandals increasing the awareness of these problems. However, not all Member States want to change the status quo. The purpose of this thesis is therefore to establish what progress in the short and long term should look like in respect of tackling the problems which arise from the coexistence of 27 different corporate tax systems. To achieve this, the problems which arise due to the lack of harmonisation are identified and used as a framework for subsequent analysis of the different forms of harmonisation. Both the four freedoms case law and the State aid controls are analysed respectively. These two forms of negative harmonisation are assessed because positive harmonisation or integration would only be necessary if it would prove more effective at tackling the problems.

Positive harmonisation is assessed to ascertain whether it would provide a better response than negative harmonisation. This thesis demonstrates that the more effective a measure is likely to be, the less likely it is that a measure will gain the necessary support to be implemented. The unanimity requirement means that the Member States who benefit from the current differences between corporate tax systems by competing for FDI can veto corporate tax proposals that may be beneficial for the majority of Member States. As such, while in theory, positive harmonisation would provide the best solution, the most effective positive harmonisation measures are unlikely to be implemented. This thesis, therefore, illustrates that future progress at tackling the problems identified in Chapter One will only take place through negative harmonisation.