Neutrality and Subsidiarity in Taxation

Tax coordination in the European Union (EU) should be guided by the twin stars of neutrality and subsidiarity. While tax neutrality generally requires a substantial degree of tax harmonization, subsidiarity, In contrast, implies that each Member State should be permitted as much tax sovereignty as is commensurate with the goals of free trade and free competition in the single internal market. To explore the potential conflict between the neutrality objective and subsidiarity...
More Description

Tax coordination in the European Union (EU) should be guided by the twin stars of neutrality and subsidiarity. While tax neutrality generally requires a substantial degree of tax harmonization, subsidiarity, In contrast, implies that each Member State should be permitted as much tax sovereignty as is commensurate with the goals of free trade and free competition in the single internal market. To explore the potential conflict between the neutrality objective and subsidiarity considerations, The Foundation for European Fiscal Studies of Erasmus University Rotterdam organized a seminar on May 20, 1994 to discuss the presentations prepared by Stephen Smith (Jean Monnet Senior Lecturer in European Economics at University College London and Deputy Director of the Institute for Fiscal Studies) and Reneacute; Barents (Legal Secretary of the Court of Justice of the European Communities). Smith concludes that the complex balance between neutrality and subsidiarity requires supervision and audit of Member States' enforcement practices. Barents does not believe that the subsidiarity principle has operational significance in Community litigation. This brochure is the third in a new series initiated by the Foundation for European Fiscal Studies.