Size Matters: Discriminatory Intent and Discriminatory Impact in EU Law

Abstract

Member States increasingly use classifications based on company size in their tax laws. Because bigger companies are more likely to be foreign, this article poses the question whether company-size classifications indirectly discriminate on the basis of nationality in violation of the fundamental freedoms. This article’s exploration of size-based classifications reveals important open doctrinal questions about the quantum and evidentiary burden required to show indirect discrimination, and about what role, if any, intent to discriminate plays or ought to play in discrimination cases. This article considers potential justifications for company-size-based classifications, including the justifications of administrability and the goal to tax companies on the basis of ability to pay. Although this article concludes that most company-size classifications can be justified, it argues that these justifications would be difficult to apply to recently enacted taxes on digital-services.