The Significance of the Fundamental Freedoms of the European Union for German and European Tax Law

Abstract

Whereas value added tax, as an indirect tax, is largely harmonised within the European Union by the comprehensive Directive on the Common System of Value Added Tax, the law of the European Union does not directly make any general specifications for the area of direct taxes, i.e. above all income, corporation and trade tax. There are only individual directives of the European Union that regulate specific sub-areas of direct tax law. However, according to the case law of the Court of Justice of the European Union, the fundamental freedoms of the Treaty on the Functioning of the European Union constitute a European law standard for the provisions of the national tax law of the individual Member States, also in the field of direct taxation. As a result of the rulings of the Court of Justice of the European Union on the fundamental freedoms of the Treaty on the Functioning of the European Union, the Member States have repeatedly been forced to amend provisions of national law on direct taxation which, in the opinion of the Court of Justice, were incompatible with the fundamental freedoms, and to adapt them to the requirements of the Court derived from the fundamental freedoms. On the basis of landmark decisions of the Court of Justice of the European Union, this article explains how the fundamental freedoms and the case law of the Court of Justice in this regard indirectly harmonise the national law of the Member States of the European Union in the area of direct taxation as well.