This research assesses the impact of Court of Justice of the European Union (CJEU) jurisprudence on the Internal Market, by considering whether the jurisprudence of the Court on corporate taxation fulfils the constitutional mandate of establishing such a market, as set out in the European Treaties. The Court’s focus upon removing discriminatory obstacles to the fundamental freedoms does not necessarily lead to a more level playing field and increased tax neutrality. Economic analysis shows that tax induced differences in capital costs faced by firms operating within the European Internal Market may increase, whilst GDP and welfare may decrease. Consideration of actual legislative amendments introduced to thin capitalisation rules by member states following LankhorstHohorst, and to group consolidation rules following Marks & Spencer, suggests that this negative effect has actually happened. The research considers the constitutional implications of this conclusion. It concludes that the Court’s lack of consideration of the constitutional instrumental chain may mean that we are heading in the wrong direction.
Rita de la Feria and Clemens Fuest