Exit Taxes on Companies in the Context of the EU Internal Market

In Daily Mail, the Court of Justice (CJ) ruled that the freedom of establishment did not confer on companies the right to leave jurisdiction of a Member State (MS).

Ever since, exit taxation of companies has been an area full of obscurities and unknowns. Among them are: restrictive effect of non-harmonized connecting factors; an appropriate comparability standard; the absence of comparability as a ground of breach versus applying the fiscal territoriality principle at the level of justification; and criteria for an internally coherent system of exit taxation rules. Discussion of the mentioned issues aims at defining how far EU law can affect national provisions on exit taxation. In particular, the developments that the CJ case law has undergone over a past decade induce to make an abrupt conclusion: double taxation in an exit taxation case can be a fault of an MS, if viewed from the internal market perspective.

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