Changed Utterly: Conceptual Stretching and the Impact of the Tax Cases on EU State Aid Law

Abstract

Article 107(1) TFEU was originally designed to regulate the grant of subsidies by Member States but it has been applied increasingly in recent years to regulate tax measures. Attempts to apply the State aid rules in this way have been met with controversy as they have been applied in unpredictable ways that have introduced significant changes to the existing tests in the case law for identifying State aid. These changes include a broader interpretation of the concept of selectivity, one of the criteria that has been developed by the case law to identify State aid. This thesis uses primarily doctrinal legal research methods to examine how the developments in the interpretation of Article 107(1) TFEU arising from cases dealing with fiscal measures affect the application of EU State aid law to non-fiscal measures. To that end, this thesis first analyses the development of the State aid rules and the doctrinal changes that have emerged from cases involving their application to tax measures. It will also be argued that the use of these rules to control taxation has reoriented the priorities and objectives of EU State aid law. This thesis will go on to argue that these developments have the potential to influence and increase enforcement against non-fiscal measures. The robustness of these findings will then be evaluated by reference to proposals for tax harmonisation in the EU and other potential legal developments. The thesis will then consider possible improvements to the law to contain the expanding definition of the notion of aid within principled limits. These include a more systematic account of the selectivity criterion based on the discrimination standard and a more rigorous application of the criteria in Article 107(1) TFEU on distortions of competition and effects on trade between Member States.