Turnover Taxes, the Fight for the National Tax Base and the EU Court of Justice: An Undeserved Triumph for Member State Direct Tax Autonomy?

Abstract

The additional taxation of corporate turnover has emerged in the EU Member States and at the EU level as part of efforts to secure the national tax base and presumably to enable a fair and equitable sharing of the tax burden among corporate taxpayers covered by the national tax jurisdiction. Its introduction is usually based on the expectation that such taxation enables the exercise of taxing rights over value generated in the national analogue and digital economy when the traditional taxation of corporate income seems to fail in achieving the same. However, turnover taxes are problematic tax instruments from a legal perspective and their lawfulness is debatable as a matter of both EU and national law. After years of contestation before the European Commission and the courts of the EU based on EU internal market and State aid law, it has been revealed that EU law is not available to challenge some of the fundamental problems with the regulation of turnover taxes. As the law now stands, there is a possibility that in this area of taxation Member States can get away with misrepresenting their intentions and abusing their taxing rights in this way. This latter issue must not be overlooked when addressing the non- or under-taxation of corporate taxpayers in the national and the European economy. turnover taxation, digital taxes, national tax base, Member State tax policy autonomy, discrimination, abuse of taxing rights