Article 116 TFEU : a ‘dead letter’ or a viable option for the implementation of qualified majority voting in matters concerning taxation?

Abstract

This work constitutes an analysis of Article 116 of the Treaty on the Functioning of the European Union, which is currently being explored by the Von der Leyen administration as a method of introducing Qualified Majority Voting into matters of EU taxation. Since the Lisbon Treaty, decision-making in taxation still requires unanimity in the European Council. The EU Commission states that unanimity in taxation leads to legislative deadlocks, arguing that it constitutes a hinderance to tax policy reform required to complete the Single Market. Article 116 TFEU constitutes an ‘anti-distortion mechanism’, designed to eliminate harmful distortions of competition caused by significant and harmful disparities arising from disparities between the normative provisions of Member State legislation. This provision is undoubtedly capable of eliminating distortions arising from different national tax laws, as evidenced by the Spaak Report of 1956, however, it has yet to see active use in EU tax matters. Furthermore, the CJEU has yet to pronounce itself in this regard, and thus, the lack of jurisprudence subjects this provision to legal uncertainty. Part 1 of this work is, therefore, dedicated to comprehensively analysing the wording of both Article 116 and 117 TFEU, known jointly as the ‘Market Distortion Provisions’, along with an overview of the limited prior use of this provision. Part 2 focuses on other distinct yet similar anti-distortion mechanisms of the TFEU, operating within the same current legal framework. The ‘Political Dimension‘ to the potential invocation of Article 116 is commented on Part 3, while Part 4 attempts to consolidate the findings of this work into three flow charts, to give an indicative overview of how Article 116 TFEU may function today.