Climate Norms Reshaping the International Law of Taxation: Insights from the Advisory Opinions on Climate Change

The recent advisory opinions on climate change by the International Court of Justice, the Inter-American Court of Human Rights and the International Tribunal for the Law of the Sea, alongside the European Court of Human Rights’ decision in Klimaseniorinnen, extend their legal implications to international tax law. These implications reach well beyond tax measures that directly impact mitigation, such as exemptions for fossil fuels. According to these pronouncements, the obligations under the Paris Agreement, the customary duty to prevent significant environmental harm and other applicable law, oblige states to undertake tax reforms within their national circumstances when necessary to ensure the fiscal adequacy of domestic climate measures. Also, the duty to cooperate requires states to better align international tax rules with climate objectives. Amending tax treaties to reflect climate objectives – such as introducing variable withholding tax rates or capital gains taxing rights based on environmental concerns – deserves consideration. Through the prism of climate legal obligations, the influence of international law – including customary international law previously considered of limited efficacy in constraining tax sovereignty – is substantially strengthened within the tax domain.