Principles of subsidiarity and proporcionality in tax law enforcement

Abstract

Subject. The principles of subsidiarity proportionality, which serve as the basic principles for
determining the competence of integration associations, are considered in the article.
Aim. The aim of this paper is to analyse the place and the importance of Member States’ obligations
deriving from the EU legal order in order to address the relationships between EU law
and national tax law, as well as to analyse the practice of using of principles of subsidiarity and
proportionality by the highest courts of the Russian Federation as a federal state.
Methodology. The author uses methods of theoretical analysis, particularly the theory of
integrative legal consciousness, as well as legal methods, including formal legal method and
comparative law.
Results, scope. The exercise of power by the European Union in the areas of shared competence
must respect the principle of subsidiarity. The founding Treaties make clear that
subsidiarity is a legal enforceable legal principle. However. the case law of the European
Court of Justice reveals that the enforcement of subsidiarity as a judicial principle has been
ineffective.
The article examines cross-border loss relief for group companies in the context of European
Union law and considers how this has affected Member States such as the UK. The
case law of the Court of Justice is then analysed in an attempt to assess whether some of
the principles set out in these legislative initiatives found their way to Member State laws
through the Court's jurisprudence. Following this, the judicial and legislative response to
the Marks & Spencer judgment in the UK are critically assessed.
The practical suggestions are looking at developing EU compatible tax principles to be applied
to cross-border taxation within the EU.
Having considered the principles of subsidiarity and proportionality in the context of interaction
between integration and national tax law, the author suggests directions for improving
the practice of integration tax law. The supranational judicial authority should dwell on
the position that only those differences that are directly based on the origin of the income
or nationality of the taxpayer can be justified on the basis of restrictions on fundamental
freedoms.

Conclusions. The author comes to the conclusion that a co-ordinated approach to crossborder tax is essential. The effectiveness of integration tax law will largely depend on how the ratio of the norms of integration and national law in the tax jurisdiction of the Union and member states will be formed. However, historically direct tax has been viewed by Member States as central to national sovereignty.