According to EU law the prevailing divergences between the national tax systems shall not be corrected by unilateral measures that grant fiscal advantages to firms, which are affected by the disparities between tax systems.
Equally, the corrections implemented unilaterally that mean to neutralise the disparities between tax systems shall be aligned with the logic of international tax treaties, EU law and basic tax principles. The CJEU held that such corrections that restrict the free movement within the internal market are allowed only when applied to wholly artificial constructions.
The State aid regime relies as well on a notion that defines the genuine nature of a transaction: the Market Economy Investor Principle, which in its turn is a corollary of the arm’s length principle. If the final aim is the prevention of BEPS, can artificiality have distinct meanings in State aid law as opposed to the framework of free movement provisions? By Emanuela Matei, Mircea and Partners Law Firm