Tax Legislation and the Notion of Fiscal Aid A Review of Five Years of European Jurisprudence

Abstract

State aid discipline under Art. 107, 108 TFEU has established itself as a major constraint to the tax sovereignty of national legislators. By analyzing a great number of CJEU judgments delivered during the last 5 years, this article lays out both the conceptual and the political issues which arise when tax benefits are subject to control under European competition law. This affects the concepts of “advantage”, “selectivity” and “discrimination” as well as special cases like “negative state aid”, “indirect selectivity” or “de-facto selectivity”. The author proposes to apply Art. 107 par. 1 TFEU only if a tax provision deviates beneficially from a “normal” or “benchmark” treatment and rejects the trend to interpret Art. 107 par. 1 TFEU as a general ban on discrimination. Moreover, this article pleads for a limited reading of “selectivity” which is only given when a tax advantage confers a financial benefit on certain branches of the economy or certain individualized enterprises.