Non-discriminatory Tax Obstacles

In Case C-76/90 Säger, the European Court of Justice (ECJ) held that the EU free movement provisions require not only the elimination of all discrimination on grounds of nationality but also the abolition of any restriction, when it is liable to prohibit or otherwise impede economic activities. A national measure that is liable to prohibit or otherwise impede economic activities restricts free movement even in cases where there is no allegation of discrimination on grounds of nationality. The alleged 'problem' with this formulation is that it makes no reference to the size or scale of the impediment: it is sufficient that there is one or liable to be one (there is no de minimis rule). Also, it is not necessary to establish a discrimination of cross-border activity. It is a controversial question whether, on this basis, non-discriminatory tax measures can be tested against the free movement provisions.

The prevailing view in literature is that the Säger formula cannot, without modification, be applied in direct tax cases, because another approach would encroach too much on the tax sovereignty of EU Member States. This article examines whether this fear is justified. It does so by having recourse to Robert Alexy's theory of principles and a thorough analysis of ECJ case law.