Could and Should the European Union Integrate Member States’ Income Taxation Systems?

Since its foundation to date, the EU constitutional powers and supranational politics on integration of a wide-range of national policy regimes have undergone an unprecedented transformation to create EU-level rules. Yet, income taxation is a policy area where a significant integrational gap still exists in the EU. This gap primarily stems from a challenge of dual character: one, unspoken tax powers in the constitution and, secondly, taxation – a symbol of sovereignty – is seated deep in the national politics. Against that backdrop, the thesis examines EU law and politics with a view to explore prospects for integration of national tax systems on the way to institution of a single European market.
   
   In dissecting legal dimensions of EU tax integration, the study adopts an evolutionary approach. It follows a legal evolution model where EU-level legislative powers remain “mobile” in the quest of attaining a single market pursuant to fundamental freedoms and constitutional prohibitions. The analysis builds on a process of “communautairization” of national policy regimes wherein relational framework between the Member States gradually evolve and transform from the one based on the international legal model to an EU legal order. On the other hand, in examining the European tax politics, the study relies heavily on neofunctional model that theorizes creation of EU (tax) rules alongside and beyond the policymaking based truly on national decision-making. The political dimension also takes into account the transnational pushes generated by the rise of recent anti-avoidance tide around the globe, and the way EU-level tax politics may possibly capitalize on it and transpose it into European tax order.
   
   The study finds that consistent with growing competences in other policy areas, EU legislative powers in tax domain also expand. The study posits that this premise holds more relevance to the post-Lisbon era. In the same vein, based on a temporal analysis, the study also suggests that tax policymaking is not immune to supranational politics. If viewed through a larger picture paradigm, the pooling of tax authority continues from national level to the EU. The legal and political analysis of the recent application of state aid rules to income taxes suggests that the tax-aid activity, in prospect, might pave a way towards tax measures in the pursuit of a “one-European-voice” in tax deals with the non-EU jurisdictions. Likewise, the developments post-relaunch of the CCCTB plan indicate that it is likely that a recent shift in EU approach may result in some real progress on common tax base rules for companies first the time in the European history. The thesis finally concludes that the EU could, and indeed should, move on to integrate national tax systems to address challenges to the establishment of a real, efficient and sustainable single market.