The relevance of the procedural framework principles in the Direct Tax Cases of the CJEU


The European Court of Justice (hereinafter the ‘CJEU’ or the ‘Court’) has developed a judicial approach in which it has judged whether domestic direct tax measures (income or corporate taxes) violate the principle of non-discrimination found in the Treaty, as reflected in the so called fundamental freedoms: free movement of goods, free movement of workers, freedom of establishment, free movement of services, and free movement of capital. Commentators have developed an in-depth analysis of tax discrimination or restrictions, but have devoted scant attention to procedural non-tax issues that play a very important role in shaping the actual decisions of the Court in tax matters. Te Court has relied on its judicial tradition in the broad sense, particularly in respect to procedural issues. This process resulted in a discernible set of criteria that are defined here as ‘framework principles’. The first of these principles is that in spite of the fact that Member States retain their tax sovereignty, there can be actual breaches of EU tax law that are sanctioned by the Court. The second principle is that, in spite of the fact that there are national tax interpretive traditions, there are indeed common guidelines for uniform interpretation in tax cases. A third framework principle is that national courts have a monopoly over relevant tax questions which must be referred to the CJEU, a principle that results in a judicial network that connect different adjudicative agents. A final framework principle in tax cases is that Member States as a result of rulings by the Court must refund taxes to taxpayers and this poses major problems particularly in the current climate of budget restrictions.