Chapter 2 examined the current instruments of positive integration that affect Member State corporate tax systems. It was shown that, notwithstanding the limitations of the Union’s power to legislate in the direct tax field, there has been legislation in areas where it was deemed expedient for the proper functioning of the Internal Market. This legislation is, however, limited and targeted to specific situations. The Chapter examines the Parent-Subsidiary Directive, the Interest and Royalties Directive, the directives on mutual assistance, the Arbitration Convention and the Tax Dispute Resolution Mechanisms Directive. There is also a review of the Anti-Tax Avoidance Directive.

Chapter 7 examined the concept of tax avoidance in the context of EU law. This chapter also examined various types of anti-abuse rules and their compatibility with EU law. An attempt was made to assess the Court’s judgments in the area of controlled foreign companies, thin capitalization and transfer pricing. The position following the introduction of the Anti-Tax Avoidance Directive was also assessed, whenever relevant. It was shown that there is some tension between established case law and the provisions of the Anti-Tax Avoidance Directive, most of which apply primarily in a mechanical way. What was also notable was the shift of emphasis from having the Court of Justice scrutinize national anti-abuse rules, to demanding from Member States to introduce de minimis anti-abuse rules based on this Directive. As regards transfer pricing rules, it was argued that the current judgments of the Court of Justice could give rise to variable interpretation of basic concepts of international tax law, due to the obscure relationship between the Court’s commercial justification test and the OECD’s arm’s length principle.

Chapter 6 examined aspects of reorganisations, focusing first on the Merger Directive. It was shown that as a result of the limitations of the Merger Directive, freedom of establishment and the free movement of capital have been used to ensure that a wider range of reorganisation operations are protected. Chapter 6 examined situations where a company migrates to another jurisdiction by transferring its seat and the exit tax implications of these. The early case law on exit taxes levied on individuals was briefly reviewed and contrasted with later case law . In this later case law, the Court of Justice mandated that Member States must give taxpayers the option to choose between immediate payment of the exit tax, or deferred payment with all its administrative difficulties, including (possibly) the payment of interest and the provision of a bank guarantee when there was a risk of non-recovery. In more recent cases, the Court of Justice found the phased deferral of exit taxes to be permissible and the payment of 5 yearly instalments proportional. The exit tax provision of the Anti-Tax Avoidance Directive was also examined.