Regulating Tax Competition in the Internal Market: Is the European Commission Finally Changing Course?

Abstract

The establishment of an internal market has not only increased cross-border mobility, but also triggered more direct tax competition between EU Member States. Relying on national tax laws in an attempt to attract businesses and investment benefitting from free movement rights under EU law, Member States have been willing to lower their tax rates and to offer specific advantages to incoming businesses. In an attempt to avoid Member States’ competitive dynamics from resulting in a race to the fiscal bottom, the European Union responded to those tendencies by proposing different steps to curb harmful tax competition. This Article offers an overview of the different regulatory responses put in place at EU level to address and regulate tax competition, prior to calling for a more integrated Commission approach governing tax competition in the internal market.