The Nexus between the Two Fiscal State Aid Waves and Harmful Tax Competition

Abstract

Abstract In this chapter, the most important thread binding the two fiscal State aid waves are analysed in depth, namely their common link (and contribution) to the EU’s fight against harmful tax competition. By referring to the work of the Code of Conduct group, Commission press releases, official statements by Competition Commissioners, and various academic sources, it is shown that many of the cases pursued by the Commission in both fiscal aid waves concerned tax measures that presented actual or potential harmful tax competition elements. It is, moreover, reiterated that the Commission’s expansive interpretation of the ‘selectivity’ and ‘advantage’ conditions in the first and second waves, respectively, was instrumental in targeting such tax measures, which might have otherwise escaped State aid scrutiny. On the basis of the above, it is concluded that the Commission has at times employed its powerful hard law apparatus under Article 107 TFEU in order to further the soft law goals of the Code of Conduct for Business Taxation.