Through its two rulings on 24 September, the European Court of Justice (CJEU) gave differentiated signals on its interpretation of EU regulation on State Aid and Taxation around two decisions by which the European Commission invalidated so-called “tax rulings”.
Whilst confirming the Commission’s tough position in the case of a tax ruling granted to Fiat Chrysler by Luxembourg, the Court rejected the Commission’s position regarding another similar ruling to Starbucks by the Netherlands. These steps shed light on the compatibility of a fair taxation policy, respectful of Competition policy in general and State Aid regulation in particular. It also provides useful guidance on the distribution of tasks between EU and Member States’ levels.
Going beyond this issue, this development and decision of the CJEU also shows the debate’s progress. A fair and effective taxation system, ensuring that everybody contributes their due share, is amongst European citizens’ increasingly important expectations. As such, and on top of the files linked with the EU Competition policy on State Aid, European Commission President-elect Ursula von der Leyen put a specific emphasis on the need for a “Fair and Effective Taxation” in the portfolio of Mr Gentiloni, Commissioner-designate for Economy.
One of the focuses on the future European Commission will be to “ensure that tax policies are fair, fit for the digital economy and make it easier for businesses and people to work across borders”, calling for the adaptation of the “tax systems to a changing labour market and new and emerging business models”. These over-arching priorities should be translated into proposals for an international and agreed approach on digital taxation, the review of the Energy Taxation Directive, as well as the proposal of a Carbon Border Tax. It will also involve progress in the fight against tax fraud, tax evasion and tax avoidance, as well as the development of measures to combat harmful tax regimes around the world.
CEEP wholeheartedly supports Commissioner Vestager’s exhaustive approach, aiming at investigating and addressing the issue of “aggressive tax measures” by combining “legislative changes, [enforcement of] State aid rules and a change in corporate philosophies”, and will keep monitoring the developments by the new European Commission on this issue in the coming months.