An Account of Recent Activity of the European Commission on Applying State Aid Rules to Income Taxes: In Retrospect and Prospect

The recent activity of the European Commission on applying state aid rules to the advance tax rulings and advance pricing agreements issued by tax authorities of Member States to multinationals has gained a considerable amount of global attention. The far-reaching implications of the activity can be weighed from the fact that the dealing European competition commissioner tops the list of those creating tax impact around the globe in the year 2015. The "political heat" of investigations has already escalated beyond Europe and is being felt in the international circles since the multinationals in question include some of the big global names, headquartered in the USA. How does the ongoing tax-aid scrutiny involving international tax implications for non-EU firms fit into the future tax horizons of Europe? How does it fit into the current European tax legislation agenda on, for example, the re-launch of a CCCTB plan, the post-BEPS world and the recent anti-avoidance legislation adopted by the EU? Does it, in a narrow perspective, typify the usual patchwork to create a level playing field through tax harmony? Or, on a bigger landscape based on the long-term institutional framework, could such a rigorous activity around a common area indeed transform into a foundational phase towards a bigger process shaping something akin to ‘one-European-response’ in the international tax matters in the times ahead? Looking back at the European integration path, in particular the complex fiscal construct at the crisscross of taxes, harmonization, competition and avoidance, the article attempts to provide some broader insights on the EU tax journey in prospect. It builds on a holistic approach to trace the locus of the current tax-aid activity in European integration and explores the possible course these developments may take in the long term.