Recent proclamations on European tax policy suggest a paradigm shift whereby competitiveness has increasingly replaced fairness as the central objective. The article undertakes to explore what competitiveness may mean for European tax policy. It commences by clarifying the concept and finds two key dimensions – competitiveness of businesses (economic competitiveness) and the agility of the European Union (EU) regarding changes in internal or external circumstances (institutional competitiveness). Concrete initiatives on competitiveness have largely been limited to decluttering efforts regarding prior EU regulation. By contrast, further integration efforts have largely stalled. The contribution discusses options for promoting institutional competitiveness and thus for overcoming this stalemate. It begins with the Pillar II Directive. If concerns persist despite the recent sideby-side agreement, an annulment by the Court of Justice of the EU (CJEU) based on the principle of legality of taxation may be the only realistic option. Flexibility mechanisms in future EU legislative proposals would require Treaty amendments. The grounds for justification should be reconsidered regarding the free movement of capital in third country situations. The Commission should also generally rethink its role: in European direct taxation, it might be more successful as a coordinator rather than initiator of binding EU legislation.
Intertax