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Traditional and Alternative Routes to European Tax Review

Traditional and Alternative Routes to European Tax Integration, by Dennis Weber

Review author: Christiana HJI Panayi. Reprinted from British Tax Review, Issue 3, 2011
Sweet & Maxwell, 100 Avenue Road. Swiss Cottage. London NW3 3PF
Traditional and Alternative Routes to European Tax Review - Book Cover(Law Publishers)

 
This is the fourth book produced following a conference by the Group for Research in European and International Taxation (GREIT), this time in Amsterdam in 2009. As with the previous three books, it is based on the papers written by the various speakers to the conference. Broadly, the book looks at primary and secondary sources of EU law and how they lead to tax integration in Europe. Various instruments which are available to Member States and the EU are discussed and their mutual relationship is examined. The book includes a general report drafted by Dennis Weber and is divided into seven parts.

The first part considers the sources of EU law for integration in direct and indirect taxation. The two chapters slightly overlap, as both consider the traditional and the more modern (alternative) methods of integration. There is an analysis of the legislative bases used for de minimis tax harmonisation and the limitations of this framework. The authors also consider how new methods of co-ordination and co-operation, such as the use of soft law and the enhanced co-operation procedure, lead to further integration. It is questioned whether this is preferable to full harmonisation.
 
The second part delves into the topic of soft law. Soft law is of increasing importance in the
tax field. In this part, there is a discussion of the types of instruments used to create soft law,
their character (preparatory or informative, interpretative or decisional), their effects (internal
or external) and the number of parties they encompass. The reviewability of soft law by European courts is also examined. There is an excellent analysis of the Code of Conduct for Business Taxation as an example of a new and diversified mechanism of governance which fosters dialogue between EU agencies and stakeholders. The effectiveness of this Code and, more generally, the interactive quality of soft policymaking and regulation are evaluated. Soft law as an instrument of international tax co-ordination and the importance of the OECD as a promulgator of soft international tax law are also considered.

The third part, which consists of one chapter only, deals with infringement proceedings and
their contribution to the development of EU law. There is a useful outline of the procedure and the law-making impact of the Court of Justice’s decisions in this area. It is questioned whether infringement proceedings have any effect on the law-making processes in the Member States and it is argued that positive legislative action is preferable.

Comitology is the topic of discussion in the fourth part of the book. This new procedure,
whereby legislative powers of the Council are delegated to the European Commission and to
the comitology committees to be decided by qualified majority voting, is examined. There is a good description of the current application of comitology under some tax instruments (e.g. under Directive 2008/118/EC (the General Excise Duty Directive) 1 and Directive 2010/24/EU
(the Mutual Assistance Directive) for the recovery of taxes 2 and the proposed application of it under others (e.g. under an amended Savings Directive, still being discussed, and under the proposed Common Consolidated Corporate Tax Base). Comitology is defended and its usefulness and legitimacy extolled.

Part five deals with the relationship between primary and secondary EU law. Here, the authors examine issues such as the compatibility of secondary law with primary law and the use of different interpretation criteria in making such an assessment (e.g. reconciliatory interpretation).
 
Similarly, part six discusses the compatibility of the VAT system in the EU with primary law.
Here, it is shown how general principles of EU law and especially the principles of proportionality and equality have infiltrated the VAT regime. Nevertheless, it is argued that the current regime still does not meet the conditions of the internal market and that it imposes serious obstacles.
 
The final part, again consisting of one chapter only, considers the relationship between EU
Treaty freedoms and the directives in the field of direct taxation. One interesting question
addressed in this chapter is whether provisions can be found in the direct taxation directives
which are in conflict with EU Treaty freedoms. Examples are given from the Merger Directive 3 and the Interest and Royalty Directive.4 The discussion is based on how primary EU law is hierarchically superior to secondary EU law and the repercussions of this superiority.

Overall, this book provides a good analysis of some of the topics relating to tax integration
in the EU. Apart from the excellent analyses contained in some parts, a major contribution of
this book is that it brings into the discussion some refreshingly new ideas and arguments. The traditional and largely entrenched routes to tax integration are still there, but the book moves the discussion to another level. One criticism that can be levelled against the book is that there is no discussion of the role of national courts in the development of EU law. Another criticism is that the lack of a concluding chapter renders it difficult to link together all the issues arising and, most importantly, to try and delineate the common thread between traditional and alternative routes to integration. This is perhaps intentional. To the extent that European tax integration has not been completed, many issues are bound to be left open.
 
Christiana HJI Panayi*
Taxation of Intellectual Property, 2nd, by Anne Fairpo, (Tottel Publishing, 2009).
 
Notes:

1 Council Directive 2008/118/EC of December 16, 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC [2009] OJ L9/12.
 
First published in 2002, the second edition of this book—like its predecessor—analyses the tax implications of intellectual property (IP) at the various stages of the life cycle of IP assets, from 2 Council Directive 2010/24/EU of March 16, 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures [ 2010] OJ L84/1.
 
3 Council Directive 90/434/EEC of July 23, 1990 on the Common System of Taxation Applicable to Mergers, Divisions,
Transfers of Assests and Exchanges of Shares concerning Companies of Different Member States [1990] OJ L225/1, amended by Council Directive 2005/19/EC of February 7, 2005 [2005] OJ L58/19.
 
4 Council Directive 2003/49/EC of June 3, 2003 on a Common System of Taxation Applicable to Interest and Royalty Payments Made Between Associated Companies of Different Member States [2003] OJ L157/49.
 
* Senior Lecturer in Tax Law, Queen Mary University of London, Centre for Commercial Law Studies and researcher at the Institute for Fiscal Studies.
Book Reviews 357
[2011] BTR, No.3 © 2011 Thomson Reuters (Professional) UK Limited and Contributors