The Taxing Powers of the European Union: A Legal Analysis of the Levying of EU Taxes

This book discusses the question of whether the European Union (EU) can introduce its own taxes and examines the policy and legal limitations it faces when doing so. “EU tax” is intended as unrequited, mandatory pecuniary contribution to the government, levied on individuals, companies or products – not on the Member States; whose essential elements are designed at EU level; and whose goal is, at least in part, to raise revenues, which go, at least in part, to the EU budget. In Chapter 2, the book investigates the existence of a legal basis in the EU Treaties by using historical and teleological interpretation techniques. It concludes that for an EU tax with a predominant revenue raising goal the legal basis should be article 311 of the Treaty on the Functioning of the European Union (TFEU). However, if the EU tax has multiple equally relevant goals, there needs to be a supporting legal basis. The book then shifts to discussing the policy considerations the EU legislator should take into account when transforming certain revenue streams into EU own resources. Each type of revenue is tested against three criteria: proportionality, allocation and efficiency. Performing positively from the perspective of one criterion does not necessarily entail similar results for the other criteria, highlighting the complex policy trade-offs involved in designing a coherent system of EU own resources. Shifting from the choice of revenue streams to tax design, the book then uses the principle of equality as the primary benchmark. It concludes that the EU general principle of equality constrains the design of an EU tax differently depending on whether the tax has the main goal of raising revenues or other, parallel goals. Whereas in the first case there needs to be an objective justification for treating products or producers in competition with each other differently, in the second case comparability is assessed considering the wider objectives of the provision, thereby granting more leeway to the EU legislator for discrimination. This book provides a foundational analysis of the EU’s taxing powers for both legal scholars and policymakers, offering a deep dive into the complex intersection of EU law, taxation and public finance concepts.